I purchased an iPhone 3GS from someone else, I had the handset unlocked to 02 network.......I then sold the handset to a friend of mine as I was no longer using it, however after syncing the fone to iTunes she selected update software....she requested a refund which I grudge fully gave her due to her messing around with the handset.......however since I've had it back when it is switched on it says it is unable to authenticate??? What does this mean and is the phone completely unusable now or can I fix it??

You would probably do better if you asked this question on iPhoneForums.

Here is the link. iPhone Forum - Active Topics

You'll need to register there, but there are some real experts there, so it's worth it.