I'm following this guide pretty well..

Pwnage Tool : FAQ and TUTORIAL For Unlocking/Jailbreaking! [1.1 Mac][Win RC1!] - Mac Forums

When i run pwnagetool and it finds the iphone 1.1.4 firmware however, it tells me to plug in my ipod and put it into restore mode. My iphone won't get OUT of restore mode, so i dont see why its not recognizing it in restore mode. The second i plug my iphone in the usb cable pointing to the itunes logo comes up on the screen, and itunes loads and says it has detected a device in recovery mode and that i need to restore. What do i have to do for pwnageTool to recognize that im in recovery mood?

Thanks for the help.