Okay I downloaded a custom firmware from the download page on this site. Now what do I do next, because when I go to Itunes restore, it says itll update NEWEST software updates, which is what I do not want. Do I unzip, etc and how do I find file? Whats this Shift+H stuff?
The only way to jailbreak iPhone 4 is with jailbreakme and the phone needs to be on 4.0.1
If your firmware is higher then you need to downgrade the firmware. This is only possible if you have SHSH files previously stored with cydia. I'm guessing you don't have this.
If you don't and you're on 4.0.2 or 4.1 then you can't jailbreak at present.
Ok I understand. You want to restore your phone to 4.0.1.
In order to do that you need to have the SHSH file stored for 4.0.1 (even though you're already on it)
Download tiny umbrella
Connect your iPhone
Go to advanced options
Select iPhone 4 4.0.1
Click save shsh (from cydia)
If successful, you are in luck.
Download genuine apple firmware 4.0.1
Start tinyumbrella TSS server
Start iTunes
Hold shift and click restore
Select the 4.0.1 ipsw
And let iTunes do it's stuff