Did this for a friend last night. Took an eternity because of various issues but got there eventually! The process:

  • Update to official firmware (OFW) v3.55 (either download http://us.playstation.com/support/systemupdates/ps3/pc_update/index.htm to usb stick or go straight to system update menu and carry out online)
  • Download geohot custom firmware (CFW) from http://www.geohot.com/jailbreak.zip
  • Follow the instructions from the official update link above (1.copy ps3updat.pup to usb stick in folder /PS3/UPDATE 2. From the PS3 dashboard select system update and choose local storage media)
  • Voila – you should now see the “Install Package Files” menu item under the Game menu on the dashboard

I believe the above works 100% of the time. There is no need to boot the PS3 into restore mode. In fact, when i try the CFW update from restore mode I get the “Corrupt data” (8002FB27).

Good luck!