It is my understanding that error 1 is a baseband failure.
If that is the case, you're crawling down a rabbit hole you'll not come out of with that phone.
Reflowing baseband chip might temporarily fix the problem, freezing it might get you through the reset, but the problem still exists, I don't believe you can replace the baseband, given its nature associated to the device.
Essentially, without baseband you've got an ipod, if you can ever get past the update/restore. I've never seen baseband problems get better.