I'm not sure if Volcanion was present in the files from the 1.3.36 version of the game : PSSE has built-in files from the v1.3.36 of the game for now, so if Volcanion is present in it you can add him to your party but in-game it will have default type/ability (30BP, normal, Opportunist) because those informations were added in the v 1.3.37 of the game.
Anyway, you can't update your game with PSSE, you need to download the update directly in-game. You shouldn't update to 11.3 yet though, as it patches a lot of useful things. If you have homebrews set up you probably copied smea's starter kit to your Sd card : if that's the case, you can use ctr-httpwn (on of the homebrews in it) to update your game and connect online without updating to 11.3. Basically you just launch it once each time you power up your console and you can use online functions without being on the latest firmware version.
I've been editing my save since nearly the beginning of the game. There are absolutely no problems since most of it is local play. Just make sure you don't beat your highscore in online competitions with a team that includes illegal pokemons (pokemons that you couldn't normally obtain), that's basically the only thing you can get banned for.
I'll look into this, but it's really odd since PSSE should only interfere with stuff inside the savefile, not the gameplay itself. How many jewels/hearts/coins did you have before and after editing ?
