IPhone 5 Will Not Restore in Recovery Mode

Hi everyone,
I am currently having a pretty serious problem with my iPhone 5 16GB (iOS7.0.2). Today, I discovered that my phone was "searching" for cell service despite being in an area with good coverage. This issue continued for 5 hours. I tried to turn it on/off, a hard reset, turning "airplane mode" on/off, and even tried to restore it! When I attempted to restore it however, iTunes told me that "Find my iPhone" had to be turned off. Then, I kept getting an error that there was a problem deregistering it from my iCloud account. Finally, I decided (after creating a full backup) to put the phone into recover mode and try to restore it that way. Not only, did I get an "error (1)", I attempted that FIVE times and now my phone is stuck in recovery mode. Hopefully, I can get it fixed or else I'll have to replace the thing.
PLEASE HELP ME.
P.S. I might add that oddly, the phone still receives calls; my wife tried calling the phone, and it not only rings, it even goes to voicemail...

Hey there Lorenzo Carunun,
It sounds like you are unable to restore your device with iTunes at all. You did some great troubleshooting to start with. I would recommend the steps in this article named:
iOS: Troubleshooting update and restore issues
http://support.apple.com/kb/TS1275
Install the latest version of iTunes.
Verify that your computer operating system is up to date. If an update requires a restart, check for updates again after restarting.
On a Mac: In the Apple () menu, choose Software Update. Install all available updates.
On a Windows PC: Go to the Microsoft Windows Update page.
Check your security software: Note: Most restore issues are caused by out-of-date or incorrectly configured security software, firewalls, and network router settings or firmware.
Isolate the issue to third-party software.
Update security software.
Properly configure your security software.
Temporarily disable or uninstall your security software.
Temporarily remove any unnecessary USB devices, leaving only your iPhone, iPad, or iPod touch, the USB cable that came with your device, and a keyboard and mouse, if necessary.
Restart your computer and try again.
Note: To perform some of these steps, you need to be logged in to the computer as an administrator. If you are not sure if you have administrator access, contact the owner of the computer or the system administrator.
You may have done a step or 2 already, so feel free to skip those steps you have done.
Thank you for using Apple Support Communities.
All the best,
Sterling

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