I used redsn0w_win_0.9.6rc14 and selected iPhone3,1_4.3.2_8H7_Restore.ipsw and jailbroke with no issues, but the version still says 4.3.1 and every time i log in to itunes it nags me to upgrade.
When you go to your phone Settings, General, About and look at firmware what version does it say? If it says 4.3.1 then you're on 4.3.1. Did you upgrade the firmware through iTunes before you began? redsn0w doesn't upgrade the firmware for you, the phone needs to be running 4.3.2 before you start the redsn0w process. iClarified - iPhone - How to Jailbreak Your iPhone 4 Using RedSn0w (Windows) [4.3.2]
Interesting -- so you can use the ipsw of the current firmware to JB a previous firmware? Did not know this was possible -- and I agree, I think it's probably what happened here....
So OP, use iTunes to upgrade or restore to 4.3.2 and then due your JB again...