I keep getting the message :No SIM card installed Insert a valid SIM with no PIN lock to activate iPhone - there is a sim in the tray in the phone...how do I fix this?

I have recently upgraded from the iPhone 3g to an iPhone 4, and I was going to give my 3g to a friend, but it comes up with the message as above, whenever the phone is turned on...
There is a sim card installed...
My carrier (virgin) say that they have unlocked the phone from optus.
How do I fix this?
thanks
Anushka

Virgin use the Optus network here in Australia - which is why, the 3G phones showed you connected to the Optus network, and not to the Virgin network...They don't have their own network, they piggyback on Optus - which is why it would show that it is locked to Optus!
They also said they would unlock my iPhone 4 - which has been done! So there's obviously something wrong with the phone...

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