IPhone Locking when updating

i was given a first generation iPhone by my aunt in America. i live in New Zealand and my aunt said that she was told that i could use my phone in New Zealand with an NZ sim card. it worked for the first few hours but when i tried to update it it locked its self, and i could only make emergency calls... i managed to take it into a cell phone store and they fixed the problem, but did not tell me that i could not update it, so the next week i tried again... with the same result. again, i got it fixed...
i just want to see if there was any way to get my phone updated without it locking... so if any one has any insight, please tell me... im still using version 1.1.4!!! it is so annoying!!!

i'm really confused..
i buy my iphone in Indonesia. and the seller says that it was the factory unlock so it's safe for me to use the iphone with different kind of sim card. and it's works.. i can use it with my old sim card. but apparently the problems come when i want to update my iphone. and the first time i updated my iphone suddenly my iphone unlocked and i cannot do anything except emergency calls. after i bring it to the seller, he said that the problem is with the update thing because he said that the update isn't perfect enough to be downloaded. so after i found out that there is newest update so i try again but the same problem come to me. now my iphone locked again. i really confused while the seller said that it's factory unlocked and it's safe to change with any sim card but from other post i read that it's because the iphone hasn't unlocked yet.
help me to find out..
it's killing me that i'm still using the old version.and even i cannot put my facebook on my iphone. it' sad really sad.

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