You need to
1st. Download the firmware you want to be on. ( you must also have blobs for said firmware)
You keep saying 5.1, do you literally mean 5.1 or 5.0.1 or 5.1.1?
Step2. Use redsnow to stitch together the firmware with the blobs that are specific to your device.
Step 3. Edit your host files to point to cydias servers. It is theorized that having signed blogs means you don't have to touch host files, I did edit host files and was successful, so I say do it.
Step 4. Hook phone up to computer, power down phone, open red snow, select option for enter PWNED DFU. Follow redsnow to get your phone into PWNED dfu state.
Step5. Open iTunes shift+restore. Select your freshly created custom firmware.
Step6. You will get an error when the restore completes. It will be unknown -1.
Step 7. Open up redsnow select kick device out of recovery. Follow instructions, it's same as when you did PWNED dfu.
When done there restart phone and find that you are on a clean install of whatever firmware you chose.
If it doesn't work, if you get an error other than -1 during restore then go back and read what I have just posted and do exactly what I said. I have no other advice or options than what I have just posted. In summation what I just posted is what works, if it doesn't work you did something wrong, and if you think that you do everything right, but it didn't work, you are in fact wrong! You didn't do it right.
i would recommend that you save the blobs directly to your computer. then try stitching them together again. and making a completely new stitched (custom) firmware.
the 3194 error means that your hosts are not redirecting as they should be. or your phone isnt in the pwned dfu state.
did redsnow tell you that it was succesful in placing the device into pwned dfu and tell you that it is now safe to restore in itunes??
when you edited the hosts file, did you save it as "all files" or as a text document?
mac or pc?
its not really a hostgs file then. you need to save it as "all files" when saving it.
to do that you will have to open it as an administrator, usually you would right click and open as administrator to acheive this.