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Sorry to tell you this, but from your description, something is bollixed in the boot sequence, if you don't have the XMB, the system is hung up...
If you can get to the XMB, do a system format - it could be a hard drive read failure or some such (you could also try swapping the hard drive if you have an extra 2 1/2 drive lying around the house). Unfortunately, from your description, it seems most likely that the unit will have to go back to Sony. The good news is that their turnaround time is FAST... I called on a Wednesday, had my return box on Friday, sent it off, and had a replacement unit the following Wednesday.
The hard drive is bust m8, you should remove the drive and take it to a local computer store and ask them 2 format the drive for you. When they come back and say the drive is unreadable ask them what replacements they have, i upgraded 2 a 160gig for £40.
Hey guys, same thing happened to me. In case you're looking at this site like I recently had been, I just wanted to post a little update. I bought my PS3 on the Christmas of 2007, and it stopped working after I played an online round of Tekken: Dark Resurrection on July 5. It froze on the wavy part of the introduction of the PS3 system. So what you do is:
1. Press the PS3 "touch" power button and hold it until you hear two buttons "beep" 2. Connect your USB cord to your ps3 controller and press the center button when instructed on the screen. 3. Choose the third choice on the screen which says something about restoring the data (sorry i cant remember i know its the third choice though) 4. When it asks you its question say "Yes." and it will begin the restoring process with the download bar. 5. When its complete it may make you do step 4 once more, so just do it again, or any more times it asks, until it finally restarts properly. ( I had to do it two times)
I hope this helps you guys, it helped me the first day it stopped working!