FINALLY figured it out!!!!
Here's the info incase anyone else has the same problem..
Last week I went on ebay and ordered a 2mm micro mini jumper shunt for the hard drive. Had to buy 10pk. Came to $2.00 shipped from Spain. Glad it didnt take very long to get here.

This is the one I got:
10x Generic Micro Mini Jumper Shunt 2mm 2 00 PCB Laptop 1 8" 2 5" HDD | eBay
This is the settings for the hard drive. I needed to limit to 1.5 Gbits.
View attachment 3991
Popped the hard drive back in. I first went to recovery mode, and choose restore file system. That did not work.
Then I just started the ps3 like normal, and it did its thing. Formatted the hard drive and installed 3.55 without any issues.
Now I will install the latest cfw.
Thanks for everyones help!!