That schematic is different fom mine. That one is limits the voltage to arduino, and in other post i said that arduino may go down if it has not enought power. So that can really be the problem, i'll have to wait for other's answer to make sure.
None of the PSN payloads work? Or it's only the 3.50 spoof that doesn't work?
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Just read on psx-scene that Sony has already patched PSN!