How to Exit recovery loop - Blackra1n jailbreak was interrupted on 3GS IOS 3.1.2

[jigz787]

I was trying to jailbreak my iphone (using Blackra1n) 3GS which is running on IOS 3.1.2 firmware 5.11.07 and unfortunately jailbreaking was interrupted and I ended up in recovery loop.
I re-tried jailbreaking with Blackra1n and it successfully worked, and then I installed Cydia and also clicked on "make my life easier".
Now, the problem is that it goes to recovery loop every time I reboot it. Now, for the time being I am fixing it by jailbreaking using blackra1n every time it goes into recovery loop.
I tried making custom IPSW using sn0wbreeze but then when I restore the firmware using itunes, it give error 1604. I also tried running tiny umbrella on windows XP, it give an error saying "can not start TSSserver"
Now I am on Windows 7 and downloaded Tiny Umbrella and does not even open (gives some "JRE JAVA not found" error).

I also tried iReb but no luck.
Your help will be greatly appreciated.

I do not want to upgrade my baseband, however, as a last choice, I can do clean restore on itunes which will load new baseband and IOS 4.2 BUT I must unlock the phone, Will limera1n and ultra sn0w work on clean IOS 4.2 with new baseband?

[iYeow]

You must update your Java for your windows 7 to work with tiny umbrella or you can edit your host file to point towards cydia.
Restore to stock 3.1.2 and jailbreak with redsn0w 0.9.4
OR
Restore to stock 4.0 and jailbreak with jaibreakme from safari on your iphone.