It's likely the unlock that is causing your restore problems. I'm going to move your thread into the unlock forum.
I'm guessing you meant it was unlocked with ultrasn0w, which is an unlocking app in Cydia. Unlocking methods like this make it where you can't simply update in iTunes like everyone else. If the right steps aren't following, you'll either lose the unlock or get stuck during the restore.
Do you know which baseband you have? Did you buy it unlocked or unlock it yourself?
Unfortunately, the seller didn't warn you about updating. Fixing it will be somewhat technical. It's difficult to point you in the right direction since I don't know which baseband it has, what carrier the phone was locked to, what SHSHs you have backed up, etc.
I would start by editing your hosts file so it points to Cydia, and then making and restoring to a custom 5.x firmware (use snowbreeze) that will jailbreak and hactivate it.