Same thing happened to me, the Chinese one I received wasn't even in new condition either.

If you flash 005 over 003 the CMT flash will fail. The phone will no longer detect SIM cards.

However...

In my case after flashing 005, I was able to flash just the CMT from 003 firmware to make the phone usable again. It doesn't have any problems, but any time I reflash I'll always have to flash the CMT from 003 variant after or the phone won't work properly.

The procedure is described here: https://wiki.maemo.org/Flashing_N9#R...m_flash_errors

I used the CMT from here: http://www.mrcrab.net/nokia/Nokia_N9...n=40.2012.21.3