These instructions apply to the situation in which someone has set the lock code and can't remember it. The result is a “wipe data/factory reset”.
All user data and installed programs are lost.
See http://phandroid.com/2008/10/25/how-to-reset-your-g1-and-start-from-scratch/ for more information.
This trick is no longer necessary (if it ever was). Instead, just work through the Android menus–there's an option to bypass the telephone configuration.
Set the APN (Access Point Name) to point to the Cingular service provider. From the Home screen on the Android…
To configure Android-based phones to work with PAL2.0…
1. Settings (from home screen, press option hard key).
2. Wireless & Networks.
3. Wi-Fi settings.
4. Add Wi-Fi network (at bottom of screen).
That should do it and PAL2.0 should connect.