We tried all. iTunes running, iTunes not running, iTunes reinstalled etc. I don't think this is a solution of how to use the jailbreak but I think the jailbreak is broken.
I notified Geohot on Facebook about this but I don't know if he will read, if someone has better connections with him please notify him of these problems.
For those of you who can't get it to work, the key is to have iTunes open and running before you run limera1n. Also, make sure you reboot the iPad once after jailbreaking.
Okay well we aren't stupid, I hold the home button for the whole sequence once and still nothing. It's a software bug, no doubt about it.