I had success with this method at the second time of trying. At first I didnt delete the com.apple.mobile.installation.plist and the iphone froze when booting up, iTunes would not recognise the iphone and eventually after trying to get back to 2.1, I nearly bricked the phone and had the most trouble I've ever had with my iphone. Eventually I got sorted.
My fix:
Flashed stock firmware 2.02 on a 7.7 Itunes machine (yes I have 2 pc's

)
Used quickpwn build 150 to quickpwn, jailbreak and unlock 2.02
Upgraded to 2.1 on my itunes 8 machine, this retained jailbreak and unlock
ran "quickpwniphone2.1" on my Itunes 7.7 machine this time "deselecting everything but install cydia" and deleting com.apple.mobile.installation.plist and replacing MobileInstallation.framework
My iphone is now working great and cydia installs just fine, almost feels as smooth as when it came out the box at 1.1.4
The reason it asks you to use ITunes 7.7 is the applemobiledevice.dll file was upgraded in iTunes 8 and this is what detects jailbreaking attempts and leads to error 1600 and error 6
In my experience it seems you dont see these errors if you use the stock files like 2.02 (which can be jailbroken in windows) and update through itunes8 to 2.1
When I tried to use "quickpwniphone2.1" on my Itunes 8 machine it detected applemobiledevice.dll as a fault and did not run to completion properly, perhaps if you only install cydia it will work but if you try to jailbreak or unlock it will not under iTunes 8
Using "quickpwniphone2.1" under itunes 7.7 did bring up any error reports in the script and ran to completion
I hope this helps some of you with problems