TS4268 iPhone 4  not recognize Apple ID or password

Since updating to iOS 7.0.4 my iPhone 4 does not recognize my Apple ID and password to activate iMessage.  I have verified that I have a wifi connection as well as Apple ID and password which work on my iPad.

Why don't you skip that step until you get the iPad activated and then troubleshoot it after the iPad is usable? You do not have to enter your Apple ID and password during activation, unless you are trying to restore from the iCloud backup.
The backup will still be there to restore from anyway after you activate. It is tied to your Apple ID. Your password is tied to your ID, but the password can be changed without having to create a new Apple ID and you do want to continue to use the current Apple ID.
Have you tried restarting the iPad and just start all over again?
IMO - resetting the password can cause problems so don't do that over and over again if it didn't work the first time.

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