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You should be able to play PS1 games as long as they're the original game discs.
PS2 games, you'll need one of the PHATS with the Emotion Chip or SW emulation to play from the original discs.
As I understand it, you have the emu's built in the OFW 4.00 but they don't kick in unless you are playing PS1/PS2 titles bought from PSN.
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