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Oh no that really sucks bro, well your PS3 is not broke but you did erase all of your data from the HD. What you need to do is get an external HD that has a USB2.0 port on it & is formatted in FAT32. Open the ext. HD on a computer & make a folder in it named PS3. Open the newly made PS3 folder & make a another new folder named UPDATE inside of it. After you have done that go here: http://dus01.ps3.update.playstation.net/update/ps3/image/us/2012_0705_31f890bd9e75deed773c29e51e56a4...
this link should start the latest PS3 firmware update (what your PS3 was asking you for) downloading to your computer. After you have downloaded the PS3UPDAT.PUP file open the ext. HD on your computer again & transfer the .PUP file into the UPDATE folder you created earlier. Once you have the latest PS3 firmware on the ext. HD connect it to the PS3 through a USB port & turn it on if powered through a plug. When you start the PS3 again it will once again say the system software was not found & to connect an ext. source containing the latest firmware update & hold start & select together for 5 seconds or something similar. Since you should already have the ext. HD connected to the PS3 & powered on when asked to hold start & select together for the specified amount of time do so & the firmware update should begin. Now just follow the on screen instructions & after the firmware is downloaded & installed to the PS3 you'll be good to go again. But like I said before you erased all your data when you allowed it to try to restore it also reformatted your HD in the process deleting all of your data on the HD. Now from the sounds of it you haven't backed up your PS3 to HD or you would've know what it was asking you for. SO the really bad news is unless you've backed up your saves to an ext. HD or to the PS Plus cloud they are gone for good. Also you will have to re-install all your disc based games, re-download all the games & DLC you've bought off the PSN which can be down by going into the PS store & going to your download list you will not have to buy them again, & re-download all of the game updates for your games unless you have a PS plus subscription in that case I would just download the updates of the games you really want to play & let the automatic update feature of PS Plus handle the rest. Hope this helps & sorry about the bad news if you don't have a backup to restore from.
Oh almost forgot to mention if you ever come across that issue again when the PS3 tells you that it was shut down improperly & it needs to restore just press the circle button & it will exit that screen & the PS3 will start normally. You don't have to perform a system restore in this event & unless the system software itself was corrupted your PS3 will work without problem. I have experienced the same issue a few times from loss of power & the first time I did like you did & followed the on screen instructions. Which ended up in me having to reformat my HD & re-install the current firmware at the time. Fortunately I regularly backup my PS3 so I had a backup to restore from. But the second time it happened I didn't want to go through all of that again & decided to see if I could exit the system shut down improperly screen by pressing circle & it actually worked. My PS3 has had no issues whatsoever since & it has happened a couple times after that too. But the best advice I can give you is to regularly backup your PS3 to an ext. HD that way whatever may happen you can easily restore you HD's contents.
That seems like too much work and I'm.not at all a tech head so if that's the case ill just buy a new one. Rather than mess it up even.more due to my lack of knowledge
Seriously that would be a severe waste of money, it does seem like a lot to do but an external hard drive will run you about $50 to $100 vs. the $250 or however much the PS3's are going for now. Also you can't mess up your PS3 more by trying this. If you find my instructions a little confusing just search updating the PS3 firmware through external media & there is a ton of info on it describing the process better than I did. I have to stress again there is nothing wrong with your PS3 it just does not have the latest firmware update on the internal HD.