[kellun]

I want to restore my jailbroken 3GS running iOS 5.0.1 to factory default setting.

I used redsn0w to jailbreak it and it is a tethered jailbreak. I tried everything. I tried to use iTunes restore. I even tried to restore it from a backup.
Each time I get a 1602 error message and I would have to boot it up again.

When I put the phone in recovery mode, iTunes does not recognize it.

Please can anyone help me?

[iDonev]

Have you updated to the iPad baseband (06.15.00)? If so you will not be able to simply click restore in iTunes. Go get the latest sn0wbreeze and create a custom IPSW using Baseband Preservation Mode. This will get rid of Cydia and your tethered jailbreak.