by asking if the micro sd has been tested, i just ment that it has been used to play roms before. sometimes you hear about a micro sd that just doesn't work after a format. it happens from time to time thats why that information is important. you mentioned that it is formatted in FAT, which is the correct method. if it is fat32 or 16 does not really matter unless you have a cheap off brand card and you are trying to get some of the notorious .nds roms to play (castlevania, etc). because you can play .nds roms i will assume that your firmware flash went a'ok. my advice to you at this point is to reformat your micro sd doing a full format, then just flash 1 or 2 gba roms to the cart. make sure you flash them 1 at a time and don't use the batch flashing method. as i stated earlier i've had mixed results with it, my most recent is that i batch flashed 10 roms and the first one would not load. i was forced to delete it and reflash it.
i can tell you that when i flash roms i use the defult settings. i don't need any of those fancy speed hacks, cheats, or soft resets. so try the defults as well...
once that is done try to run those few roms you flash in the 'gba' mode by pressing 'start' when the m3 lite has fully booted into your nds. if at this point you can't load or play and gba you may simply have a faulty m3 lite. it is known to happen, infact some of the more recent m3 real cards have had a bad batch. the m3 team is a little hard to get an e-mail response from, and if you have a bad card you should start the process to RMA and return it to where you purchased it from. i can tell you that once the card is working, it is a great flash kit that can do a lot of good, and provide a ton of fun. so don't give up just yet....
you could try reflashing your firmware to the most recent SD version. just drop the firmware and nothing else on the newly formatted micro sd and let it load. after that delete the firmware off of the micro sd and flash some gba roms to test with.
this is all you can really do as far as debugging. the only other step would be to purchase a different micro sd. i did not ask what one you have but i can suggest the kingston 1gb and 2gb japanese TF, and the scan disk ultra II models. they have both been reported to be compatable with all the .nds roms and infact the japanese kingston is often sold as a package deal with flash kits these days. i myself own 2 of the japanese kingstons and will probably buy a third when i run out of space.
the firmware i am currently using is updagcsd.e35. i don't know if this is the most current right now but it was around x-mas with i flashed my card. it is working just fine for me so perhaps you want to try that version.
again post back with your results. but at this point i'm out of debugging ideas after this post!
goodluck,
-Another World