Sony Ericsson :: C905 - Emergency Calls Only / No Network Coverage

I bought a used, not branded SE c905 (bought in Europe) on eBay, popped in my AT&T SIM and the display changed from "AT&T" (recognized network) to 'emergency calls only' to 'no network coverage', to 'no access to network' to 'inactive SIM'. It switches back and forth between these states, and AT&T, when I called them, said that it's the phone (locked on another network), not the SIM.

The SE phone was previously used in Canada and was used on both Fido and Rogers networks without problems, I am told. To test things out I:
- Put the AT&T SIM in my old phone and it works perfectly, (my old phone is an AT&T Nokia that I had unlocked).
- Put the AT&T SIM in a friend's phone (also unlocked) and it works fine
- Put a friend's T-Mobile SIM in the SE and it worked (although it showed no bars, but displayed the T-Mobile network) and made calls just fine.
There are no AT&T settings in the phone - but I should still be able to make and receive calls, and send and receive SMS - but that's not the case.