I was trying to play a backup of Red Steel 2, but first the Disc Channel said that I needed to update firmware which I did not do. The second time I loaded it the Disc Channel responded that it was "unable to read the disc." I loaded my other backups and even the config disc and still got the same response. This is the first gen Wiikey and I got it back in early 2008. The firmware I'm using is 4.0U. If the Wiikey is busted for good is there a way to switch it out with a new modchip?
It is possible that the modchip died, became corrupted or desoldered. If it's firmware corrupted, then you should be able to fix it with the wiikey recovery disk. If the wires broke loose then you would need to resolder it. In any case, it would probably be easier to just softmod the console. Follow this guide. http://my.afterdawn.com/larrylje_redwings/blog_entry.cfm/4429