iTunes says phone locked with passcode

Follow these steps to place your iOS device into recovery mode. If your iOS device is already in recovery mode, you can proceed immediately to step 6.

   1. Disconnect the USB cable from the iPhone, iPad, or iPod touch and leave 

       one end of the cable connected to your computer's USB port.

   2. Turn off the device: Press and hold the Sleep/Wake button for a few seconds

       until the red slider appears, then slide the slider. Wait for the device to turn off.

              * If you cannot turn off the device using the slider, press and hold the

                Sleep/Wake and Home buttons at the same time. When the device turns off,

                release the Sleep/Wake and Home buttons.

  3. While pressing and holding the Home button, reconnect the USB cable to the

       device. The device should turn on. Note: If you see the battery charge warning,

       let the device charge for at least ten minutes, and then start with step 2 again.

  4. Continue holding the Home button until you see the "Connect to iTunes" screen.

       When this screen appears you can release the Home button:

  5. If necessary, open iTunes. You should see the following "recovery mode" alert:

  6. Use iTunes to restore the device.