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Hard Reset procedure for the PS3 (as instructed by Sony CS).
Be sure to backup your settings/games saves by doing a System > Backup on your PS3 or you may lose your game saves! Also, this is a last resort procedure prior to exchanging/returning to sony.
1. Power Off the PS3 via the power switch in back and power back on w/switch.
2. Hold Power Button on the Front until you hear 3 beeps.
3. Then go through the initial setup and then run a full Format via System > Format. (will take approx 3 1/1 hours). You may need to have our AV cables ready if your using HDMI (in case HDMI isn't detected after initial reset).
4. Restore your backup you made prior to doing factory/hard reset (optional, if you created a backup).
I'm also having this problem as well, it has to do with the OS and it is corrupted. It seems like the "Game mode" has been corrupted preventing us from playing games on the hard drive or reading games.