3GS Bricked after attemted jailbreak

I recently attempted to jailbreak my 3GS and something has gone wrong because it does not get past the spinning wheel logo. I bought the phone and was not aware that it needed a passcode to unlock so I connected to itunes and did a restore to 5.0.1. Once that was completed the phone was in setup mode but i did not have a sim card to complete so i tried to jailbreak using redsn0w to bypass this. I had checkmarked the install cydia and update to ipad baseband boxes to start. All seemed like it was working but during the install on the screen with the running pineapple it made it half way through and froze. Now when I try to do restore in itunes it says the phone is not eligible for update. Is there any fix for this???
Thanks!

Unfortunately, you've made a somewhat workable situation decidedly worse...

1) If you don't require an unlock, you REALLY should not have upgraded to the iPad baseband. You've most likely broken your GPS and you will never be able to complete a stock restore on this device again. You also cannot undo this action by any known method. If this is a newer 3GS (newer than week 35 of 2011) you may as well have bricked the baseband, stopping your WiFi / Cellular Radio from being able to function.
2) The iPhone is not eligible for this update indicates you're pointing iTunes to a non-current .IPSW. This won't work. Read up on 'SHSH' and why they are important (either the link in my sig, though that is a bit technical, or just google it) as they will answer your question as to why you're receiving the 'device is not eligible' error.

To fix this now, since you've updated to the iPad baseband, you have to use redsn0w to create a custom 5.0.1 firmware without a baseband update, then restore that. Don't pre-stitch with an SHSH, don't use TinyUmbrella, and make sure your hosts file does NOT have any lines pointing to gs.apple.com. If you don't, your phone will just bootloop at the end of the update process. You will have to do this every time you restore in the future as well.

That should get you running 5.0.1 (with the 06.15.00 baseband) and the phone should be at the 'Plug in to iTunes to Activate' screen, instead of bootlooping. You can then use redsn0w 0.9.10b1 to jailbreak and hacktivate the device.

Thanks for your immediate response. I am new to all this so please excuse all the questions.
1. Do I need a sim card to complete the steps you suggested?
2. How do I use redsnow to create a custom 5.0.1 firmware?

You shouldn't need a SIM card to do this, redsn0w will note that you have no SIM installed during the jailbreak and will hacktivate at that point.

To make a custom .IPSW is actually pretty simple, you probably would have figured it out of you had run the program:

1) Download redsn0w from the dev-team's website and ONLY FROM THE DEV-TEAM'S WEBSITE!
2) Run redsn0w
3) Click 'Extras'
4) Click 'Custom IPSW - Preserve Baseband with custom IPSW'
5) Browse to the .IPSW for iOS 5.0.1 for your model hardware (download this from iClarified or Apple directly, do not download .IPSW files from anywhere else on the internet!)
6) This will create a NO_BB .IPSW that does not have the baseband.
7) Click on the 'Pwned DFU' button in redsn0w under extras, and then use iTunes to restore the custom firmware.

Any particular version of redsnow that i need to download?
Do I download from the dev team blog official torrents section?

TRied to restore per your steps above and still get the same message from itunes that the device isnt eligible for the requested build. Any thoughts??

redsn0w 0.9.10b1 is the version you need. If you're getting the 3194 (Device is not eligible) this means either you're using the wrong .IPSW (you must use a stock 5.0.1 IPSW, no other version will work) or you have a line in yours hosts file that points to gs.apple.com -- if you do, remove it. It indicates that it's not getting the required response from Apple in order to sign and authorize the firmware restore to your device. This can also be caused by bad network connectivity, but much more rarely so.

Fix that and restore again, you should be fine.

Once again thanks for your response and excuse my questions.
How do i check to see if my host file has the gs.apple.com and how do i remove it?
When you say stock 5.0.1 ipsw you mean not the custom version? I downloaded my ipsw from iclarified for the 3GS 5.0.1 restore for Mac OS. Is that the correct version?
Thanks again for your help!

If you're running windows, your hosts file is C:\windows\system32\drivers\etc\hosts -- open that in a text editor, if there's a line for gs.apple.com, remove the entire line. I can't remember where the hosts file is on Mac, but a quick google search will tell you -- once you find it, the same instructions apply. Make sure there are no lines in it pointing to gs.apple.com -- TinyUmbrella could have made them a long time ago and they'll stick around.

Secondarily, you're correct, you need to download a stock 5.0.1 firmware and not an existing customized one -- the one you got from iClarified should be fine. I expect in this case that it's the hosts file actually causing you issues.

I looked in my host files on the mac which is where i did the jailbreak from and did not see any gs.apple.com line items. I then tried to do the update on my PC but when i downloaded the ios 5.0.1 file from iclarified it did not unzip into an ipsw format for some reason. Therefore I could not try the restore. Any other ideas would be greatly appreciated.
Thanks!