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I'd recommend leaving the deactivated sim in the phone. You can't update or restore any GSM iPhone without a sim card installed. The sim card need not be activated, but it must bre valid & present.
http://t1.gstatic.com/images?q=tbn:ANd9GcQtWZGxsdmBED1RaAseSpiH6zEeQ0yETOmAsN_fpoTUNR_qc6FjoQ:0.tqn.com/d/ipod/1/0/c/I/-/-/activate-iphone-1.jpg
Another idea, if you do run into a snag with the activation app: restore from an old itunes backup instead of letting itunes treat it like a new phone. You can always delete all the stuff you don't want after you're able to use the phone normally.
I also forgot to mention that I had jail broken it the first time to "hacktivate/activate" and then some idiot took my iPhone and tried to update it to the iTunes ios 6. Redsn0w doesn't recognize my device in DFU mode when I tried to jailbreak it again.
Thank you for helping and responding fast though!
You've moved beyond my realm of expertise though, honestly. Luke may have an answer, but I guess he doesn't read these posts anymore. You might try the "contact" form on this site, though - he might check that.