Use Sn0wbreeze. Redsn0w custom IPSW process is buggy. Sn0wbreeze works perfectly. As always, make sure to enter PWNED DFU before restoring to any custom IPSW. Sn0wbreeze has iREB (DFU PWNer) built into it.
Be sure to choose "iFaith" mode to use your SHSH from Tiny Umbrella, or it will never work. iOS 5.0.1 is not being signed any more therfore you must stitch the 5.0.1 blobs into your custom IPSW.
Make sure to download Tiny Umbrella, Open it, plug in iPhone and click "Save SHSH".
The click on the "Advanced" tab.
In the Advanced tab you will see a whit box. It is tha path to your SHSH blobs.
Now Open Sn0wbreeze, click "Okay" then click the big blue arrow button on the bottom right.
Click browse and locate the iPhone 4 5.0.1 IPSW. (must be the right IPSW for your device model. which would be iPhone 4 GSM)
After IPSW is selected make sure to click "iFaith Mode", then click OK.
A window should pop up with a list of your SHSH download from Tiny Umbrell awhen you clicked the "Save SHSH" button. However, if it is not there, then navigate in that window through the path that the "advanced" tab in TU showed you.
Click "Build IPSW" then click the blue arrow button in the bottom right corner.
This will work, provided you entered PWNED DFU mode before shif+restoring to the Sn0wbreeze IPSW.