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That error (10000110) is failed to erase nor. Are you sure that is the error? Because u are not trying to erase the nor, when doing a backup.
As for not being able to update. Make sure the SD card is pushed all the way into the slot. When u turn on the ps3 with the update.bin on the root, all the blue leds light at once.
You could also try updating from Usb.
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