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I've had a play arround with the hold switch while trying to launch the installer and I've not run into anything so far. Might be specific to a certain model.
I've added both your other points though, their deffo one's to watch for.
EDIT: OK, just tried my UMD game from the memory stick. Got an error "game could not be started" so, changed UMD ISO MODE to Sony NP9660 as directed in my guide. Loaded perfectly afterwards.
Yep that setting allows you to trick the PSP into thinking there's a disk in the UMD drive as far as I know (otherwise the psp checks the drive and gets confused). You need it set to either the M33 or Sony setting.
I've got mine set to the M33 one, but I don't think there's much difference to be honest. The Video one I presume is the same, but for Video UMDs, I've not used any. so I can't confirm this completely.
As for overclocking the PSP. I don't, I know many people that have without issue.
My thinking is, why overclock when all the games will run fine anyway? Personal preference again.