From ModMyi - Wiki

This is page two of our PwnageTool OSX Usage Guide. If you have not pwnd your phone please proceed back to page 1.

Now we are going to create a custom .ipsw to flash to your iPhone via iTunes. Remember you phone is still plugged in and on the restore screen. Select IPSW Builder in PwnageTool.

Choose your options. Descriptions from PwnageTool. You'll need this file when it asks for bootoader files.

Enable baseband update - Determines if the baseband update should be enabled in the custom ipsw. Only check this button if you wish to update the baseband modem portion of your iPhone. Warming! This may remove previous baseband unlocks or other modifications that have been previously made. If in doubt leave it unchecked.

Neuter bootloader - This will enable "Bootneutering" to the baseband firmware allowing custom firmware to be installed onto the iPhone baseband by convincing the iPhone that it is secure. Arbitrary secpacks and fls files will be accepted when the device is in this state. More info about bootneuter.

Under the BootNeuter checkbox will present two new options that are selectable these are -

Upgrade to 4.6 NB: Unless you understand this option you should avoid it.

Downgrade to 3.9 NB: Unless you understand this option you should avoid it.

Unlock baseband - This will enable the unlocking of the baseband to all networks using a custom "software unlock" process. This should be used if you plan to use a SIM card from a carrier other than the one provided by your original iPhone carrier.

Activate Phone - This will activate the phone so that it can be used with iTunes. This will bypass the Apple activation process and set the iPhone to be in an Activated state allowing access to the device's functions.

Use Custom Pictures - This option enables the use of custom iPhone graphics to replace the stock images that are used when the phone boots or goes into recovery mode.

Once you have selected your options select OK, name your custom .ipsw and save it.

PwnageTool will start the process of creating your custom ipsw based on the options you selected. When it asks you for your user password type it in and select OK

When it is done PwnageTool will have something similar to the following text in its console.

Lets quit out of Pwnage tool now.

Continue to load your custom ispw.