Apple iPhone 4S locked after Upgrade to iOS 7: How can i fix this?

My Sister got an iPhone with iOS 6 and wanted to upgrade it to iOS 7.  We tried it via iTunes through the USB cable but something went wrong. I think iOS 7 downloaded correctly but, When the phone started up it had the message on the screen and the same one popped up in iTunes:
My sister had lost her old apple ID's password, so she had made a new one to use for iMessage and downloads from the App Store.  The old one is still linked to the phone.  We took it to our carrier's store and the IT guys said there was nothing they could do...
My point is this phone is brand new and the only thing wrong with it is the fact that it's locked.  Is there at least a part in the iPhone we could change or something to get it back?  or a factory reset?
Anything helps!
Cambi

You have encountered the anti-theft Activation Lock. You must enter the required information which is the "old"  Apple ID. You will have to try and recover the password here:
https://appleid.apple.com
If unable to do so, try to contact Apple Support:
https://getsupport.apple.com/Issues.action
Click "Other Apple ID Topics". If you are unable to enter the information, you iPhone is a brick.

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