The firmware you had previously, probably became corrupted somehow, hence when you "downgraded" it literally overwrote the bad firmware image. If you happen to have issues with games that came out later in the Wii's life cycle, you should be fine updating back to the latest WODE firmware. I don't think its a bug with that firmware version itself, just that something went horribly wrong with it, in your case.
Also to people suggesting he should've just switched to a softmod,
regnad clearly stated he just wanted to get his WODE back up and running, he paid hard earned cash for a device that's supposed to work, I mean, I can understand suggesting it if all methods of troubleshooting the WODE lead to the WODE being bad, but people didn't even try and just jumped to the conclusion he should forget about it and just softmod. If you're going to help somebody, at least read what they're telling you.