I just replaced a power/lock button on a friends iPhone, and I can 95% guarantee you that you have the screws too tight. The screws on an iphone should be hand tight for the most part. Try removing the internals again and leaving the power/lock button installed. Now back the screws out in small increments. This should illustrate that loosening the screws will allow the button to operate.
I have removed and re installed my screen several times, and about half of the time the ribbon cable gets caught up in between the screen and the frame. Try taking it apart carefully and when your feeding the ribbons through the frame, look at the ribbons from the side. Use a small tool like tweezers or toothpicks to direct it through the hole fully. This solved my problems with this issue.