assumptions: iphone 3g (not 3gs).
unable to determine current firmware on phone.
unable to determine which carrier phone is locked to
phone is in ‘emergency calls only’ state, and is locked to unknown carrier
using Windows XP (should work on Vista)

must have:
redsn0w
iphone 3.0 firmware (.ipsw file)

files & reference: – I ‘d read these links first before attempting

http://blog.iphone-dev.org/
http://www.theiphoneblog.com/2009/06/25/jailbreakunlock-iphone-30-windows-redsn0w-edition/
http://www.simonblog.com/2009/06/25/complete-guide-jailbreak-iphone-3-0-using-redsn0w/
http://limitededitioniphone.com/how-to-put-the-iphone-into-dfu-mode/
http://www.iclarified.com/entries/index.php?caid=2&scid=11&seid=1

Phone will say ‘insert sim with no PIN to activate iphone’ and have usb + itunes icon

connect iphone to pc
put it into DFU mode – not this step is possibly crucial to unlocking it when no SIM is available
should appear in windows as usb device
open itunes 8.2
restore iphone os 3.0 to it – use shift-restore and select the downloaded IPSW, or if you are certain

the firmware already matches what redsn0w supports, just let it download the default update from itunes

download redsn0w + iphone firmware that MATCHES what you just downloaded

redsn0w – open and browse to ipsw
redsn0w will patch ipsw
put iphone into DFU again (follow prompts)
redsnow will upload patched ipsw
after a few restarts iphone should load up hacked firmware and launch into springboard
it should show ‘insert sim’

connect to wireless network
open cydia
enter in URL for ultrasn0w in sources

install ultrasn0w
status window should say complete
reboot phone
insert any known working SIM

test by calling & SMSing

Check the status of phone using the Vodafone IMEI checker:
https://unlock.vodafone.com.au/voila/handsetunlock/self-service.html?method=selectService

If the phone has been carrier unlocked, the page will show instructions on how to unlock it. Basically the phone needs to be connected to iTunes, and a restore and update is performed.

On first connect, iTunes may prompt to register (associate with apple ID/register details). You should be able to cancel the registration. It may help to disconnect and reconnect the phone if the ‘cancel’ or ‘register later’ button does not work.

Latest update is ~200mb. Once the update is applied, iTunes will apply the update to the phone and verify the update. A status bar should also appear on the phone to indicate progress.

On my first restore attempt – the restore failed with an unspecified error. Unplugging and replugging in the iPhone brought it into recovery mode. Another restore attempt was successful.

On successful restore, iTunes should display a message to say it has been successfully unlocked. Mine looked like this: