My biggest mistake today to update iPhone 4s firmware to iOS 4.2

In this morning, I connected iPhone 4 to my PC and tried update the phone to iOS4.2 through iTunes. But, when iTunes showed Preparing iPhone for software update or something which I couldnt remember, this phone seemed disconnected itself from and reconnected because I could hear the sound when one plugs an USB stick. Right after that, a bubble with Apple Mobile Device (Recovery Mode) was shown in the right area of windows toolbar. And a window popped up saying New Hardware Found and asked me to locate the driver. I then checked Device Manager and found two Apple Mobile Device (Recovery Mode) entries with yellow marks. The phone just had an iTunes icon and a USB icon on the screen, forever!!
I googled this problem and found that I could connect the phone to another computer and restore it. I went to my colleague and asked for this favor. Well, I did restore the phone, though I had to reorganize all the apps and two colors appeared in my outlook exchange account for calendars. But it was bearable for me. Later at night, I made another big mistake that was to try the update again! I should have known that it wouldnt change! And now I am sitting in front of computer with a dead phone. Probably I need to go to my colleague again!
It seems that there is no chance that I can update the phone to iOS 4.2, at least not on my computer. I dont know if I can do this on another computer and I am not sure if that will delete all the data of apps, like my game saves. I am so tired of this phone now. First is the unbelievably stupid alarm clock bug and now this! OMG.
Does anyone by any chance know how to update correctly? I know I am not the only one experiencing this. Seems there are thousands out there. I really would love to hear some similar stories and suggestions. Thanks in advance
Lenovo T61 Windows XP Pro