Can anyone assist with getting iPhone 3G to work that friend just gave me?

A friend just bought a new iPhone 4 and he gave me his 3G iPhone. It is in excellent shape and I was hoping to get it to operate, initially as an Ipod/Itouch (without phone/internet service) and then possibly with phone/internet service) if it is possible to do it using my T-Mobile sim card and service plan. The 3G phone is a 16GB Model A1241. My friend wiped off all apps and information so the only thing that comes up when I turn it on is the diagram indicating to connect to iTunes and the emergency call function screen. I don't know which version of operating system is on it. It has a sim card in it which is for AT&T. Can someone please give me the steps (and the order in which to do each) necessary to 1. Upgrade the OS 2. Unlock the phone 3. Download the basic iphone apps 4. Use Wi-Fi (I have wireless in my house) 5. Download my music and sync such things as "notes and calendar", 6. Get the phone to operate using my T-Mobile service (I can upgrade my plan to include the internet if the phone will accommodate that function). I know this is a lot to ask but I'm really clueless when it comes to this. If there is software (free or for fee) that you would recommend to accomplish these task, please feel free to list them. Thanks in advance for your assistance.

A no longer activated iPhone can be used as an iPod Touch.
To install a firmware update on a no longer activated iPhone or to restore a no longer activated iPhone with iTunes if wanted or needed, the no longer activated SIM card must be inserted in the iPhone - the SIM card that was used with the iPhone when it was activated, which you have.
The iPhone is sold in the U.S. as carrier locked with AT&T only. AT&T does not unlock the iPhone for any reason or under any circumstances.
1. Upgrade the OS
If the current firmware version hasn't been installed, you should be prompted to do this the first time you connect the iPhone to iTunes on your computer. Just follow the prompts.
2. Unlock the phone
Already answered.
3. Download the basic iphone apps
The iPhone includes basic apps - the basic apps are included with the iPhone's firmware/OS. If you want to download and install any 3rd party apps from the iTunes app store, you need an iTunes account.
4. Use Wi-Fi (I have wireless in my house)
The iPhone includes wi-fi access and a no longer activated iPhone can be used as an iPod Touch with wi-fi access for internet access.
5. Download my music and sync such things as "notes and calendar"
To transfer music from your iTunes library, this is selected under the Music tab for your iPhone sync preferences with iTunes. When your iPhone is connected to iTunes, it will be available under Devices in the iTunes source list. Select the iPhone under Devices to make the various tabs for your iPhone sync preferences with iTunes available.
The iPhone supports syncing notes with the Mail.app notes feature on your Mac. You can sync calendars/calendar events with iCal and contacts with the Address Book on your Mac.
6. Get the phone to operate using my T-Mobile service (I can upgrade my plan to include the internet if the phone will accommodate that function).
Already answered. The iPhone is sold in the U.S. as carrier locked with AT&T only.

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