Hey,
I had the same problem but here is the good news this can be fixed and you don't need to send in your PS-3.
The reason it happens is because you accidentally shut-off your PS-3 using the switch in the back when the HDD indicator was flashing. Never do it here after.
Now here's how you're going to fix it. There are two ways, the easy one and a slightly complicated but slightly cheaper one.
1) Buy a new HDD and boom you're all set. It takes less time
OR
2) You need to get this one http://www.bestbuy.com/site/olspage.jsp?skuId=8774301&type=product&id=1204332553274
Once you get this, you need to remove your PS-3's hard drive and put it inside the enclosure, this connects your PS-3's HD to your PC via a USB cable and voila, you can back up your data and you must format your PS-3'S HD .
Now if your PC does not recognize your PS-3's HD, try using the software I mentioned below. Once you're done formatting your PS-3's HD, remove it from the case and pop it back into your PS-3 and it will work without any problem. Your hard disk will work perfectly, no need to buy a new one.
This is the software in case your PC doesn't recognize your PS-3's HD.
http://www.symantec.com/norton/partitionmagic.
Once you have this, just format your HD as mentioned above and you're all set.
Any questions, let me know.8)
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