OK. I think the standard error message is that there is a problem connecting to the network and to contact HP service or whatever - people usually assume this means they can't connect to wifi, but in fact that connection is successful and the problem is the absence of HP Palm profile servers.
In your case, it appears there is actually a problem connecting to your wifi. Check your router to see if the TP is detected and allowed to connect. Sometime you have to instruct the box to allow connection from a particular device by pressing a HW button or similar means through the interface. I believe there are certain channels that the TP prefers, but I can't remember what they are. You could try different channels to see if that helps.
However, I don't think any of that is relevant to your bypass problem.
You do not say why the TP was reset. Was it as the result of an error message? Was it simply done to erase your Aunt's data or did you use a doctor to install the system afresh?
Let us assume the system is functioning properly and your problem is simply a failure to connect. You are confident of your USB cable and PC USB ports. You are starting your TP in recovery mode running a devicetool.jar that's modified with a TP image.
Probably the next thing to check is that Novacom can 'see' the TP as suggested by eBlade above. It seems this doesn't work, so why not check if Novacom is correctly installed and running. I think the way to do this is by running MSconfig.exe in Windows. You can run it from the 'Run' item in the start menu.
With this utility, you can see a list of available services, set rules for how they start and turn them on and off.
So if you are satisfied that everything is running (and allowed by and security programs as mentioned by Grabber5.0), then you are maybe left with the possiblility that the mini-USB socket on the TP. Perhaps you can check with your Aunt on whether this was known to be working before.
You could try very gently flexing the plug in the socket to see if you can make a connection.
At the moment, my best guess is that the Novacom service is not running or is blocked by a security policy somewhere (Windows or any firewall)