Please Note: This ONLY Works with the iPhone 4!
Download TinyUmbrella from here Also make sure to download the iPhone 4 4.1 Firmware Located Here
Right Click the TinyUmbrella exe (umbrella-4.1.6.exe) and Choose Run as administrator from the contextual popup menu.
If you get a Windows Security Alert, make sure both boxes are checked, and hit Allow Access
Make sure the device is connected, and Umbrella has detected the type of device and its firmware.
Make sure Cydia or TinyUmbrella has an SHSH of the latest firmware. You can do this by simply clicking Save my SHSH. If you have problems saving the SHSH follow this tutorial here first.
Hit Start TSS Server and make sure you receive no errors.
Once The TSS Server is "running" successfully, umbrella will kill iTunes. Leave TinyUmbrella Open.
If you do receive an error, DO NOT continue. Your restore will not work if the TSS server cannot be started.
Open iTunes and Hit Shift+ Restore.
Browse to and select the iPhone 4.1 Firmware File.
Hit ok to Restore iPhone
iTunes should give you error 1004.
This is what we wanted, as it notes the baseband has not updated :)
Go back to the TinyUmbrella window and Click Kick Device Out of Recovery
If you have issues here, try closing and re-opening TinyUmbrella.
Your iPhone will now be on 4.1 with the 1.59.00 baseband! (Which means you can now unlock using this tutorial)
**Thanks to semaphore for his work on this tool