These are notes for me since I only do this 1 or 2 times a year and I always forget the process.
USB key root
Make folder PS3
Make folder PS3\UPDATE
Change the name of the downloaded PUP to PS3UPDAT.PUP and place it on the USB in the UPDATE folder.
Plug in USB key to your PS3
Go to Settings / System Update / Update VIA Storage Media
The Following update was found:
Version XXXX (Make sure this is the version you want to install)
Accept User Agreement