Originally Posted by iamse7en
Note: This solution I read on the Dev Team blog comments, and it worked for me as well. This is a much simpler method than downgrading your iTunes!
Short Answer: Say NO to "Has your phone been pwned before."
Long Answer: When you create your custom firmware in PwnageTool, and it asks you if you PWNED your phone before, say NO (even if you have), and PwnageTool will guide you through putting the phone in DFU mode (turning off the phone may be difficult - when you're iPhone is 'bricked' with a black screen - I had to hold home and lock buttons until PwnageTool recognized that I had turned off my phone) and then you can install the custom firmware through iTunes without the error 1600.
I had the same problem of error 1600, but this little fix worked for me and others.
Guess I'll give that a try tonight. My iPhone HAS been Pwned since 2.0; I know my phone is in DFU mode b/c iTunes pops up a message saying it is... All the steps have been the same as previous Pwnage attempts I've done (previous firmwares), but this is the first time iTunes has thrown any kind of error at me.