IPhone 4 in constant Restore mode - how can I get it back?

Question

I have an iPhone 4 running the atest version of iOS5 with the update from a few days ago as well as the newest version of iTunes from two days ago. I was working two hours from home today and I shut down the phone. When I tried to restart it an hour later, I got the screen telling me to plug my phone into my computer and iTunes. The phone is synced to my desktop, so no luck with that. I borrowed another person's MacBook and cord and tried to sync it, but since there was no internet connection it wouldn't do anything. I was without my phone the rest of the day. After work I found the nearest Apple store and took the phone in. the guy in the store told me the phone was locked in Recovery mode and needed to be restored. I needed to call my wife so I had him restore the phone in the store so the phone would work, even if I lost all my settings. Phone tools worked fine on the drive home, and I was able to reset my email to check in as well. However, once I got home I tried to sync the phone to my desktop and restore the settings from my latest backup & sync (last night), I noticed that once the restore was finished, all my purchased apps were gone from the phone, my folders were all rearranged and empty or missing, and the only message I could get on iTunes was that my phone needed to be restored again. I've tried restoring it from my backup three times, and at completion each time the only possible option I'm given is either to restore it using the backup or set it up as a new phone. All my apps are still in my app folder on iTunes, but I am given NO option at all to check any other information on the phone. It simply tells me that the computer has been synced to another device (which it hasn't) and that I can either set it up as a new phone or restore it from the backup, which just starts the cycle over again.
The guy at the Apple store said that it was possible that the firmware had been corrupted, or some other problem, and that I may need ot get a new phone. It's out of warranty and I didn't buy AppleCare (last time I'll make that mistake - it's paid for itself with all my computers), so I cannot afford to buy a new phone at $700 a pop. I'm still running OSX 10.6.8 on my desktop, not quite ready to upgrade to Lion for many reasons. Does anyone have any ideas about glitches between the new iOS5 update and the latest iTunes 10.5.1? I know there have been issues with the iOS5 update anyway.

Answer 1

I ended up doing the exact same thing and was just as surprised when it worked. Seems backwards and counterintuitive, and it's probably a big glitch somewhere in iOS5 and/or iTunes, but it did work.
Now, however, I have a new problem. I have a Bluetooth-enabled Garmin nuvi 2360 GPS I use in my car for hands-free calling with the iPhone. Never had any problems with connecting until after the restore last night. Now, even tho the iPhone is discoverable and attempts to connect, it always fails. Anyone know if there are issues with the Bluetooth capabilities of the phone with iOS5? I'm almost paranoid to try and sync the phone or shut it down again in case it craps out again. May take it to the Apple Store, but I've got a feeling they'll either tell me there's nothing they can do or that I have to buy a new phone, and I just can't do it right now.