Anytime you are touching ziphone, you are asking for trouble.
The only tool you should be using with fw 1.1.4 is iLiberty + bootneuter.
DFU restore iphone with Apple original firmware 1.1.4.
Use iLiberty to jailbreak/activate.
Use bootneuter to set neuter=on - hit flash
Use bootnetuer to set unlock=on - hit flash
Phone should be unlock.
If phone is working at that point, you can upgrade to 2.2.1 by DFU using Apple original firmware. Once done the phone will be unactivated and locked. Use Quickpwn 2.2.5-2 to jailbreak/activate and unlock.