The 3 red lights you got is known as the "Ring of Death" or total console failure. If you have a money back guarantee, I suggest you return the unit, get your money back and wait for microsoft to fix the problem with a better console. If you don't have any warranty you could try to buy one of those red light repair books or call microsoft directly and make a very strong complaint.
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Oh dear, i'm afraid to say you've got one of the 'fatal' error codes. The error you're encountering means there is a major problem with the blu-ray drive (you're PS3 is pretty much shot)...
The only thing you can do is ring Sony's tech support and arrange for a replacement console. If you are still under their one year warranty, you will get a replacement console free of charge or if your console still works just dont play that game if it keeps freezeing its becuse of the blu-ray driver :( you would need to try setting it to factory def's or if that does'nt work try rolling back the firmware upgrades........or just buy a xbox 360..
Look on the back of your tv and make sure that the red and blue cables are plugged into the right slot on the back of your tv. This would be the most common cause for something like this that you are describing.
This is almost identical to what happened to my system just before it gave me the red rings. I had to return my system. There is general hardware failure. The last lvl in assassins creed kept dropping me thought the map then i would get a checkerboard of purple and black squares all over my screen.
If you have a warranty i would return it to the store you bought it from and get a new one if not contact MS and see if they will cover it under there warranty. Since its a GPU failure i would think they would fix it for free but i cannot say for sure. They did extend there warranty on overheating which sounds like what has happend to yours to three years.