An update -- As 5:30am this morning (yes, I couldn't sleep well last night) I tried to restart my wife's iPhone and reconnected it to the iTune, and it suddenly worked!
I guess the AT&T guys must have finally fixed whatever the problem was, and now it seemed working okay. Fingers crossed...
What a long night, but at least I am glad that my wife's iPhone is finally working.
With best regards,
- Alex.
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