I went back to Itunes 10. Put my 2g in DFU then did the direct restore from Itunes.
It still went through the whole process until the pop up said wait for reboot, still apple and spinning circle with flash every few minutes, but now it's showing the red depleted battery icon? I'm totally baffled no one on here seems to know what possible hardware issue could be preventing a successful restore? I used to work on Macs do the Iphones have logic boards? either way I'm out of ideas. I've had phones that had white screens etc that I've resurrected but I'm about ready to just throw this on Craigslist for $30 as a parts phone