The iPhone could not be restored. An unknown error occurred (1604).

- Restore iPhone using Original firmware file (OS 3.0) -Download it-
- Close iTunes.
- Disconnect iPhone
- Delete any files in ~/library/itunes/Device Support/, just the files inside, not the files.
- Open PwnageTool and Create a custom firmware. -How To-
- Do not plug your iPhone in while Pwnage tool is creating the custom firmware.
- Do not open iTunes until your custom firmware is ready
- Boot iPhone in DFU mode -How To-
- Open iTunes
- Option-Click on restore button
- wait for iTunes to complete the restore process!
- enjoy jailbroken iPhone