Never ever ever under no circumstances should you modify your host file. Please change it back or iTunes will never restore to anything. modifying the host file was needed sometimes in iOS 4, but in iOS 5 it will do nothing but cause problems.
Seems to me that you have everything you need.
You have you IPSW, your iFaith blobs, and iFaith.
All you have to do is:
Open iFaith
Click on "Build *signed* IPSW w/ Blobs"
Click "Browse for SHSH Blobs cache"
Locate the iFaith SHSH blobs you saved with iFaith in the popup window
Then click "Browse for 5.0.1 IPSW"
Locate the IPSW in the pop up window (Much easier to do so when the IPSW saved to your desktop)
Let iFaith do the rest.
When iFaith finishes building the IPSW, it will automatically save it to your desktop.
You can now restore to that IPSW. YOU MUST ALWAYS enter PWNED DFU mode with iREB before restoring to any custom IPSW. If you do not enter PWNED DFU then the restore will never work. iREB is located within iFaith and is presented to you when the IPSW is finished being built.
If you closed iFaith after that, then Open iFaith, shut off device completely
click on "Use DFU Pwner (iREB)" and follow the instructions exactly.
Once you have entered PWNED DFU, then close iFaith, open iTunes, click "Okay" then hold down the shift key on your keyboard *while* you click the restore button. When you do this a familiar window pops up. Just locate the iFaith IPSW and double click on it.
As I said before, please make sure you change you host file back to the way it was...........And to always remember to NEVER modify the host file ever. Like I said, this was needed at one point in time but is not any more. If someone tells you to modify your host file, then correct them. Tiny Umbrella does that for you when enable TSS server, which points to Cydia's server........But you do not need Tiny Umbrella running a TSS server.
You do not need Tiny Umbrella because Your SHSH blobs are built into the IPSW, and once you enter PWNED DFU and shift+restore in iTunes, iTunes does not need to contact any server at all, however if your host file is modified then iTunes will forever be stuck on "preparing iPhone for restore", and will never work.
