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With the latest update to the ps3, many authorized controllers got banned from use and will not sync with the system. This was an accident that happened while Sony tried to be big business and stop brand rip off controllers (ones that look and are sold as authentic sony brand ps3 controllers) from working with the units.
Your best bet is either buy a Sony controller or wait for the next update and see if sony undoes their screw up.
i had one of these, it broke too, the problem was the usb dongle, the usb connector is very cheap and breaks easy, i did manage to fix mine but it didnt last very long, if you are good at soldering or know someone who is you can try re-soldering the four pins on the usb connector inside the usb dongle, they may have cracked and become disconected from the small circuit board, you should be able to see if there are any broken connections if you look through a magnifyer and gently move the usb lug up and down.
Usually the "red light of death" on the PS3 as it is called by some people is due to hard drive (HDD) connection errors. Here are a few things you can try to do to fix it and get your console working again as intended, just check out this short video I made (it's less than 4 minutes and contains useful pictures etc)
For more information and advice on how to fix your console, if that does not do the trick for repairing your system, check out my PS3 red flashing lights repair blog.
I had the same problem, so I called customer service and had me do this:
1) with the USB cable plugged into the controller, power down the ps3 and turn the on/off switch in the back to "off".
2) hold your thumb down on the front button (where you normally can turn it on) while turning the switch on the back to "on" again. keep your thumb or finger on the front switch.
3) You will hear the normal "beep" that you usually hear when the PS3 boots up, but after a few seconds later, you will hear a secondary beep. Remove your thumb or finger after this second beep and the PS3 will reset itself after a few seconds. I have a projector connected to it, so I had to set the display screen back to HDMI afterwards, but when I disconnected the USB cable the controller worked wirelessly again. The customer service rep said that this allowed the controller to pair with the PS3 again. Note: You probably do not have to have the controller plugged into the USB cable at all while doing this. I just happened to have it plugged in. Hope this helps.