Originally posted by another user
On the computer
1. Format USB PEN and put lv2diag.self file 1 also put PS3UPDAT.PUP in the root of the PEN (the 2 files must be in the root of the USB PEN and nothing else)
On the PS3
2. Switch off ps3 from power cord
3. Put the USB Dongle with service mode payload in the right usb port
4. Put power cord in the console
5. Press power button followed quickly with eject button, the console should boot, and then reboot. (if the beeps continue it's normal)
6. Remove service dongle
7. Put the USB Pen with the 2 files inside in the right usb port
8. Power on the PS3. If all went well you shall see the ps3 reading stuff in the usb pen, and the hard drive of ps3 working, wait for the console to power off.
9. Remove the USB PEN (you will have an UPDATER_LOG.TXT in the Pen with the details)
10. Power on the PS3
11. At this point you can check if the console boot up and its inside factory mode (red square box in the bottom left of the screen)
12. Power off the PS3
On the computer
13. All you need now is to get out of Factory Mode, so put lv2diag.self file 2 in a FAT32 blank USB Pen
On the PS3
14. Put the USB Pen in the right port with the file already on it
15. Power on (the console will power off automatically)
16. Power again and should be ok