Unable to reset/restore using sleep/wake & homes buttons.. HELP!

Oops. Let the battery drain until phone is dead. You will need to open it following guide on right of this page- take phone apart as much as you dare , desolder the battery and clean with isopropyl alcohol and soft brush. This will remove any corrosion and debris left from water( something rice will never do) including connectors/sim tray/dock/home button/cables logic/comms boards. Allow to dry overnight then reassemble and try restoring again.I' d hope the phone would improve but I wouldn't hold out huge hopes. You need to look at whether you can do the job, and whether the parts are worth the angst, as this phone is rated difficult for reason. You're looking at possibly quite an expensive fit job... The entire display ( digitiser and LCD as they're glued together ) headphone jack possibly and maybe even the dock. I think these 3 parts are worth more than current iPhone 2g resale. If you've already done a restore the phone is wiped- try selling on eBay and funding an upgrade.

I know thi is about fixing the phone and you probably can but water damage is unpredictable.