iTunes not recognizing iPhone

Hi,
After a recent messy problem with my PC, I formatted the HDD and reinstalled the operating system. I have reloaded iTunes on the PC but when I hook up my iPhone, iTunes doesn't recognize it and suggests I "restore it to factory settings".
Before I do this ( and lose my music/contacts and pics), has anyone had the same problem and did restoring the iPhone to it's factory settings result in iTunes detecting the iPhone?!

I presume iPhone is working ok otherwise?

When you say it recommends a factory reset, does that mean it's picking up a device and then saying do the factory reset?

When connected, does your PC pick it up as a camera but itunes doesn't pick it up?

Losing all your data is a pretty severe step if it isn't backed up. Did you have your iPhone synced to the previous itunes, when you reinstalled it did you link to the previous library?

What version of itunes is it and is it a different version (newer) to your previous one?

Is the version fully compatible with your OS?

Have you checked firewall settings to make sure they aren't preventing the devices being picked up?

Have you tried a basic restart on the the iPhone first?

Sorry for all the questions, but if you've no back up, the factory reset is a pretty drastic measure, so best to eliminate all the simple stuff first.

.iPhone is working fine otherwise

.yes, iTunes picks up the device and recommends a factory reset.

.PC is picking it up as an iPhone but only displays the camera details

. I manually added music/ pics to phone from previous iTunes

I'm using the most up to date version of iTunes, as I did previously, and it's
Compatible with XP

.tried the redraft to no avail.

. Firewall isn't a problem, in fact iTunes detects my iPad and it's contents fine.

Very frustrating!

Restored the phone via iTunes, but then got an error saying the phone incurred an error. The sim was locked and the phone needed to be seen by an apple rep apparently?!
Unlocked the sim on another phone, reinstalled it into the iPhone, hooked it up iTunes and it worked perfectly!

Latrade, I appreciate your help.