well, the system doesn't know the games r stored on the hdd. syscalls 35 and 36 spoof the game location. syscall 35 is for gamedata tool (i.e. spoofing installed games like psn or dlc content); syscall 36 is for app_home which would be for retail games. the system itself believes what u've mounted is inside the bd drive, so it doesn't know that it's on ur hdd.
installation is meant to make games run faster due to the limitations of the bd drive within the ps3. the way it works is that bd laser will read the first half of the disc quickly, but the second half very slowly (even slower than DVD) which is a flaw with the read speeds of the bd drive of the ps3. that's the reason for mandatory installs. since ur games r already on the hdd, it makes no difference. and, as I mentioned above, the system doesn't realize the games r on ur hdd, so it'll install the data anyway. u can negate it via modifying a specific extension, but the EBOOT.BIN will look for files locations on the hdd or within the location specified by the spoof, so it's pointless to do so.
