Had the same problem. Disabling internet and media server connections worked. Thanks for the help.
And a big old THANKS FOR NOTHING to Sony for having crappy incomplete instructions that don't work, in addition to making their consoles out of inferior parts so that I had to buy a new PS3 a couple years after my original. You're lucky your competition makes even worse hardware.
someone posted about disablinig the internet connection and media server. I did these things and the data is now transfering. So follow the normal steps and then disable the internet and media server on both systems. hope that at least helps some of you. for information purposes i'm transfering 60gb to 320gb.
had same trouble as many here, updating a 40GB fat PS3 to a brand new 320GB slim -- was getting the message that the cable wasnt connected when it was. Had tried 3 different cables to no avail.
Thanks to the posts here, was able to get it to work, finally (thanks guys), by doing the following, in this order:
1. turned off both systems, disconnected the cable and turned both systems back on without the cable connected (I am using a regular ethernet cable not a crossover)
2. On my Fat source PS3, I Deactivated both Games and Video, then in Internet settings disabled the Internet Connection, then the Media Server
3. On my Slim destination PS3, I Activated both Games and Video, then in Internet settings disabled the Internet Connection, then the Media Server
4. I went through the normal steps on the fat source PS3, but waited to connect the cable until the screen told me to.
5. Then did the normal steps for the slim destination PS3, it *finally* put me through to the screen that asked if it was ok to format the new PS3. Data transferred in less than 45 min.
THANKS AGAIN to all the help on this board.... and BOO to Sony for not updating their directions to reflect this obviously very common issue, for almost 2 years!!!