Before we begin, please note this is a very quick summed up tutorial. I am taking over for slevytam as he is away on vacation and may not be as "refined" as he is in making tutorials. It will be continuasly updated for iClarified standards. Please allow room for error.
Also note that you can use this same tutorial for iPhone 3G. The only difference is in the BootNeuter settings and the IPSW used. You will not be able to unlock.

You need iTunes 7.7 for this.

Alright, first make a folder on the desktop. In it, you will need a couple of things. The two bootloader files found here or here and Pwnage 2.0, found here or here thank Enkrypted when you see him for hosting it.
And of course, 2.0. This is the link for the 1st Gen iPhones 2.0 5A347here
When downloading the IPSW file, it is best to download it with Firefox!

Let's get started. Dont forget to create that folder on the desktop.



Open Pwnage 2.0.


Click Ok for the warning.

This tutorial is for the iPhone 1Gen, but is very similar for the iPod Touch and for the iPhone 3G.


Make sure you click Expert Mode



Click the iPhone. A check-mark will appear.



Click the blue arrow button. You will be brought to the "Browse for IPSW" page. On my laptop, it automatically found the IPSW.



If needed, find the IPSW. If you saved it to the Pwnage folder on the desktop, locate it there.



Click it, a checkmark will appear next to it. Then click the blue arrow button.



You will then be brought to a menu with 7 choices.



The General settings allows you to decide the partition size. Click activate the phone and Disable partition wipe-out. Press the next button



This is the Bootneuter settings. In it, click Neuter bootloader, Unlock baseband, and Auto-Delete BootNeuter.app. It is not necessary to upgrade the bootloader unless you are really feeling the need to be on 4.6. Click the next button.



These are the settings for Cydia. Here you can upload and create a custom package so you do not have to manually install the necessary Packages.



Clicking download packages tab and then Refresh will display all the necessary packages. Double clicking the package you want will download it and make it available in the Select packages. Checkmark the ones you want. Click the next button.






Since Cydia is the only Custom package available, leave this as shown. Click the next button.



Here you can upload your own images. Remember the rules for them: RGB or Grayscale format with Alpha channel and dimension bellow 320x480...
Click the next button.



You are now ready for it to be completed. Click the build button and then click the next button


If this is the first time doing this, you will be asked to upload the 3.9 and 4.6 BL files. When prompted to search the web, click no.



Browse for the file in your Pwnage folder on your desktop. Do the same for 4.6.



After both are found. You will be asked to save your custom .ipsw file. Save it to your Pwnage folder



Your IPSW is not being built. Please allow up to 10 minutes.



It will prompt you for your password.



When prompted if your iPhone has been Pwned before, we clicked No. It allows for a more thorough restore.



You will be asked to turn off the device. Make sure it is connected to the USB.



Be ready to follow directions now. It will ask you to hold the home button and the power button for 10 seconds. Then, you will have to release the power button and hold the home button for 10 seconds to enter DFU.



If you fail, it will show you this message. Click Yes. Unplug the iPhone from the USB. Turn it off, then turn it back on. Plug it back into the USB and turn off the iPhone when prompted.



When done correctly, Pwnage 2.0 will display this message. iTunes will also pop-up.



Hold the alt/option button and press Restore.



Find the Pwnage folder. In it, will be the CUSTOM IPSW.



Click it. It will now restore. This can also take up to 10 minutes.

Once completed, it will restart. It will launch BootNeuter.app.

Please allow 5 minutes for this to complete. It will restart once completed.