Yup, I am having to do this. Rather than the nice "The hard disk must be formatted" screen you got (and can be seen in your guide), I'm looking at "The system software cannot be run correctly"! Ooh er missus!
Not a problem, though, you just need to "insert storage media that contains update data of version 2.42 or later", which can be downloaded from here:
http://uk.playstation.com/help-support/ps3/system-software/download/ (130.4MB)
It's a PUP file, and you have to follow these instructions for the PS3 to see it on your Flash drive or USB hard disk:
To transfer the update data to your PLAYSTATION 3, save the file to a PS3 compatible storage device such as Memory Stick, Memory Stick Duo, USB drive or PSP.
Before starting, use your PC to create a folder named 'PS3' on the storage media or USB device. Within the folder, create a folder named 'UPDATE' (This folder name is case sensitive and must appear in all capital letters). Once the UPDATE folder has been created, download the PS3 system software update to this location.
Once the update data has been saved, disconnect the storage device and connect it to your PS3 via the slots under the slot cover or the USB connectors depending on the device you're using.
Once you've done that, the PS3 can find it and holding down Select and Start together for five seconds (as per the on-screen instructions) starts the format, which took less than a minute for me (same drive as professorhat) then it restarts and you install the system software.
Might be worth updating the guide? I took a photo of the screen I got if you want it.
Cheers
Robert