Hi, You are correct the power supply firmware needs to be updated and the then the server has to be power cycled and that should clear the error. [URL]  
I have a rack with 18 R720s in it. All have dual power supplies (most 495W with a couple 750W), with one set connected to a PDU on wall power, and the second set on a PDU connected to a UPS. The servers are configured for PS redundancy, and the ones on wall power were the active PSUs. I wanted to see what the UPS thought its runtime would be in the event of a power failure, so I unplugged the PDU from wall power. When I plugged it back in, all the power supplies came back on, however 5 of the systems (4 x 495W, and 1 x 750W) reported fan failure on PS1 (PSU0037). I checked the systems, the fans were all running. I pulled the plug from the PSU, then pulled the unit from the server, reinserted it, and plugged it back in. This caused the error to clear. On one of them I tried just pulling the plug, but it didn't clear until I pulled the PSU itself. Is this likely just buggy firmware, or is it indicative an actual problem? The 495W PSUs are PN 0N24MJA01 running fw version 07.25.7D, and the 750W is 05NF18A01 running 07.2B.7D. The systems that didn't have any issue are all the same PN & fw. 
R720 reports PSU fan failure after power restored