TS3694 Swapped phone with wife had "searching" error then get 1669 on restore.

Bought wife a 5S for Xmas - She took backup to itunes of old 5 & restored to 5S then swapped sim from 5 to 5S - was working fine for about a week now phone sits at "Searching" and wont make/take calls.
I put new sim into her old phone, restored my last backup (of my iphone 4) onto it and it was fine until the same day her phone stopped working now I get "searching".
So I performed a factory reset & now get the dreaded 1669 error on updating firmware and phone is stuck in reset loop.
So I put sim back into 4 and it works fine.
Only possible problem is we both forgot to delete the phones from icloud "find my phone" when we swapped sims - which I've now done on the 4 but obviously she can't on the 5 as its stuck.
So is this a IOS/icloud find my phone security bug or are both phones broken?
BTW both phones worked fine until 02-JAN-2014.

No joy...
I had already tried "recovery mode" restore to get iphone 5 working, just get 1669 after "updating firmware" status message (with progress bar 3/4 across).
Tried DFU method 1 at work this afternoon and get same message "1669" but that was using iTunes V 11.1.3.8
Due to work's Internet proxy I can't test method 2 until I get home as I can't download any software at work.
Last night we both logged into iCloud and deleted all the phones stored in there (as wife's phone wouldn't let her de-register on the 5S even though she had never registered it in the first place).
This has sorted the problem I had on the 4 where I couldn't turn off "find my phone" - I can now register & de-register the iphone 4 from the phone.
The wife can also register & de-register the 5S from the phone too now but it still wont make any calls.
Going to the local apple store tonight to see if we can get any help.
This smacks of an IOS 7.0.4 + a "find-my-phone" authorisation issue which blocked my initial restore thinking the phone was owned by someone else and leaving it in an unusable state.
I'll post an update later.

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