xWinPwn is an application to pwn your 2.0 iPod/iPhone/3G on Windows. Currently it supports the iPod touch and the 2G iPhone. It's based on xPwn 0.3 and it's coded in VB.
The program is quiet simple. Just put the firmware file in the installation directory, run the program and click on the first button (this will build the custom firmware), and then the second button (this will load the exploit in iTunes). Put your device in DFU mode, and restore with Maj.+Restore button and select the custom firmware.
You're done ! And you've got Cydia with the 2.0 firmware !!!
First time using this tool, downloded the wrong ipsw file, make double sure you get the 2G file, not the 3G file. After I messed up my phone, I used iTunes 7.5 to get back to 1.1.4 and then got this to work.
I suggest you restore the phone to a clean 1.1.4 before applying this. Just a "guess" from my experience.