I don't remember hearing about a DS2 that doesn't work on the DS. This is what your root folder on the DS2 should look like.
If it looks like this and/or doesn't work when you make it so then you might have a faulty DS2.
Odd, are you putting both Firmware and the EOS onto the SD card ?
(EOS) http://down.supercard.cn/download/dstwo/DSTWO_v1.11_2012_1224_eng.zip
(Firmware) http://down.supercard.sc/download/dstwo/Firmware/Firmware_v1.19_eng.zip
Put it into the Ds Lite 1st and the DS2 should detect the EOS file...
At the current rate $499 = £320(ish), a far more realistic price, ridiculous that it gets pushed up so far.
Same with the Euro as well, it seems the US gets the better price by far.