Hey buddy....I am in India and I am sure I can fix it. But instead of shipping it all the way to India I would suggest you Please follow this. Read this whole thing First, Download whatever you don't have already and then start.
1.The first problem is that you are getting error 160x in DFU mode. This is due to iTunes 7.7. So, you now you need to uninstall iTunes 7.7 and install iTunes 7.5. Make sure after your iTunes 7.7 uninstall you reboot your pc as it requests you to.
2.Go to My Documents > My Music > iTunes and delete the file called "iTunes Library.itl"
3.Install iTunes 7.5
4.Put your phone into DFU mode using the following steps
a. Switch off the phone.
b. Connect it to the PC-Cable and hold the Home Button.keep holding
c. Connect the cable to PC while you are still holding the Home button
d. Phone will start and go to DFU Mode.
e. iTunes will find iphone in restore mode (release home button now).
5.Hold shift and click Restore - select the 1.1.4 firmware.
6.After it's done restoring you will get some error and the phone should be in recovery mode.
7.Important! Hold shift and click Restore and select the 1.1.4 firmware file and RESTORE AGAIN.
10. After it's done open iLiberty "other tools" tab and click "jump out of recovery mode". (note - if you didn't restore TWICE as instructed above the phone won't jump out of recovery mode)
11. Download KiPhone
*Unzip all files into a folder before you run the program or it will fail*
12. Run KiPhone with Debug Boot and iErase options checked. (Leave the box for downgrade UNCHECKED)
13. Now restart the Phone. You May get message on Phone that it needs Repair etc. Don't worry. Its because we have erased the Baseband.
14. Put phone in DFU mode again as we did earlier.
15. Plug your phone into iTunes and shift+click restore to 1.1.4 AGAIN. This will write the correct 4.04.05 baseband to you phone.
Your phone should now be factory 1.1.4 with the matching baseband - all you have left is to jailbreak/unlock with Iliberty. Whatever ill effects of Ziphone will be all gone. You have a completely brand new phone.
Now you can install tweaks 1.1.4 from installer.
If you need links to Download Itunes,Kiphone, Firmware etc... refer to this link.
http://www.modmyi.com/forums/general...0-1-1-4-a.html
Get everything ready and then start the process. It needs Patience and couple of hours free time with some Coffee & smoke.
h-t-t-p://www.modmyi.com/forums/general/237491-pc-mac-guide-downgrade-2-0-1-1-4-a.html