The iPhone couldn't be restored. An unknown error occurred (3194)
(Just so this question has an answer...)

Apple is no longer signing iOS v8.0.0 installations. You will need to restore to (as of this writing) 8.1.3 which is the latest version available. The HOSTS file settings are to ensure that iTunes can talk to the update server, which isn't the issue in your case.

You are basically attempting to downgrade the software on your iPhone (since the restore process installs the newest version, and you want to restore but then go back to iOS 8.0). You cannot downgrade iOS unless Apple is still signing the previous version, which usually only occurs for a very small window after a new update is released.