It will be easy to upgrade to custom firmware.
All you need to do is follow the mini-guide below.
3.52 M33
HERE
3.52 M33-4
HERE
3.52 firmware
HERE
1.50 firmware
HERE
Download the 3.52 M33 CFW linked above. Extract the file.
Download both the 1.50 and 3.52 firmware. You need to re-name the 3.52 firmware to 352.PBP the 1.50 firmware to 150.PBP. Then add them to the M33CREATOR folder.
Now copy the M33CREATOR folder and the kxploitpatcher and kxploitpatcher% folders to the PSP MS directory of ms0:/PSP/GAME folder.
Now go to Game Menu Memory Stick and run the KXploit Permanent Patcher. It should run and say patched successfully and reboot back to the XMB.
Now go to game Menu Memory Stick and run the M33CREATOR.
After you run the M33CREATOR it should reboot back to the XMB. It should have created a 3.52 M33 update which you need to select in the Game Menu Memory Stick.
It will flash the files to the PSP and you should be at 3.52 M33 firmware. If it is then format your MS.
Now extract the 3.52 M33-4 update.
Drag the PSP folder that is in the update M33-4 into the root of the MS overwriting the files when it asks you to. Now go to Game Menu Memory Stick and run the m33-4 update. This will only take a few seconds.
After the update is finished check and make sure it says 3.52 M33-4 for firmware. If it does say 3.52 m33-4 then format the MS 1 more time.
You are now updated to 3.52 M33-4.
Now all you have to do is place your ISO/CSO PSP games in the ISO folder.
PSX games go in the /PSP/GAME folder
Emulators and 1.50 homebrew go into the /PSP/GAME150 folder.
Then all you have to do is start the Games/Homebrew from the Game Menu Memory Stick on the PSP.
