Trouble restoring locked/disabled iPhone 3G

Hello,
I have an iPhone 3G and I forgot the password. It is disabled and says connect with Itunes. When i connect it with Itunes however, it says this phone is locked with a password and cannot connect to itunes unless unlocked--but, obviously, I don't know my password!
I looked up how to recover and and restore/update the 3G and followed the steps. It instructed me to do the following:
1) Turn off iPhone
2) Plug in charger to USB port on Mac (without iPhone plugged in)
3) Open Itunes
4) Press and hold home button for a few seconds
5) Then connect to computer while still holding down home button
6) "Connect to Itunes" should appear with the Itunes logo on your iPhone
7) When this is complete your computer will notify that an iPhone was detected and is in recovery mode
8) There will be a "restore and update" button: click that and your iPhone will restore and update
9) Keep your iPhone plugged into the computer untill process is complete
10) Your iPhone will be restored and updated as a new iPhone
My Problem:
I followed the steps up until step #6 showed above. The "Connect to Itunes" did not appear. However I kept holding down the home button and it just went back to my lock screen which said: "IPHONE IS DISABLED, CONNECT TO ITUNES."
Now I am not able to restore my locked/disabled iPhone.
PLEASE HELP.

It goes directly back to this every time

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Thank you for visiting Apple Support Communities.
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http://support.apple.com/en-us/HT1808
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