Sony PlayStation 3 Fat Console PS3 CECHE01 Backwards Compatible w/ "Update Loop"

OK guys heres the deal with this console: When I first tested it out, the console was playing PS3 and PS1 games like normal..no issues at all. However, when a PS2 game was inserted, it recognized and booted the game up, but as you may know, the console asks you to press the "PS" button on the controller to continue with PS2 games. When the PS button is pressed, the console did not recognize it being pressed. I was told a possible solution would be to update the console to the new version, but the update failed, and now the console is stuck in a "System Update" loop..see pics 2-3. Whenever it is powered on, it will try to update, then fail with the error code "8002F1F9" (please Google this for more info.)

So to sum up: the console has no issues reading PS1, PS2, or PS3 discs..I even played a PS3 game for around 2 hours. The fan was normal, and did not get loud either, so there wont be any overheat issues. The issue was the controller connecting to PS2 games, and now the update loop.