Arrgh Need hand please-4 & 5 issue

I recently upgraded to an iPhone 5 and let me young daughter use my old 4.  I disabled the messaging, phone, email, etc.  She just uses it for games and music and to take photos.  She did have a passcode on it, which she always told me about.  However, she decided to change it (so her sis could not get in it) - and now she has forgotten it.  The phone screen directs me to sync with iTunes, but I have a new laptop and itunes will not recognize the phone.

I tried to restore it, and it went back to the same disabled screen with the red bar.

Anyone have any ideas?  I don't care if it wipes the data from this iphone 4. 

Thanks in advance