HT4623 Updating iphone 4 to 7.0.2; incomplete white line below & is at 99% capacity; locked w passcode

I updated my iphone 4 to IOS 7.0.2 last night using itunes and let it run overnight.  This morning the phone screen has the apple with a line below it that is 2/3rd bright white. It is also showing at 100% capacity re: GB.  Guess the OS was bigger than available data storage.  So, I tried to restore to my backup but am getting this message:  iTunes could not restore because it is locked with a passcode.  I tried turning the phone off, disconnected it from the computer, can't figure out how to get to a passcode screen.  Fortunately, I did do a backup last night before I started.  Any suggestions?

Since I posted this query, I found excellent guidance on how to perform a recovery-mode restore (topic: iOS: Unable to update or restore). I followed the directions and have itunes open but the ONLY option it is giving me is to restore to IOS 7.0.2 and NOT to restore to my backup.
I think I need to restore to my former operating system b/c the new OS is what sent my data capacity over the edge.  If I can get back to the former OS, then I can delete some of the media, etc. and provide enough space for IOS 7.0.2.
When I clicked on the only restore option it gave me, the pop-up window said "All of your media and other data will be erased, and the newest version of the iPhone software will be installed."  Don't think I want to go there . . .
How do I restore with the Backup (which is still on itunes).

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