Seems something is wrong with BMC status...
First try to apply the latest BIOS/Firmware package. Pay attention to the BMC update part and see if it completes successfully. If you see any error messages, post it here.
Second thing to check is the BMC Force update jumper. It should be in 1-2 position for normal operation. BMC functionality is disabled when BMC Force Update is enabled, thus all fans will be running at full speed. Only use it if normal BMC update process fails. After BMC update completes, power off the system, unplug power cord and restore the jumper to default (disabled) position.
Check that you have the system fans connected to header 1, 3 and 5 (http://download.intel.com/support/motherboards/server/s5520sc/sb/e39546008s5520scqsugback_ol.pdf) and then update the FRU/SDR again
And after you do all the above, try removing AC for 1 minute then power back up.
Your BMC controls the fan speed. Since it seems to be stuck in update mode, all fans go to 100% to make sure nothing over heats while the update is in progress. (which should have taken ~ 2 minutes when you were flashing that part of the BIOS)