iPhone 4 will not activate

I did the IOS 7.0.4 update on my daughters phone and it locked up on the plug with an itunes screen. The Genius bar was able to recover it and get it back on. My phone however, when I did the update will not reactivate. The support article TS3424 is my problem. Apple does not know how to clear it out. They tell me I have to replace my phone because I am out of warranty. A friend of mine said it is not a hardware issue because he back logged the firm ware and it does the same thing. He told me that the server has to be cleared. Apple claims to know nothing about it or what to do except replace the phone. Even my BBB complaint resulted in the same request....give us some more of your money. The phone I have is under 1 year old, but it is a replacement phone because my original phone was replaced, as well as my wives, because they had software problems.

What to do now??