You MUST install the new IOS 38, 53, and 55 IOSes if you want the game to boot normally from the disc channel after using update block. You can find them on the net or rip them from your own MadWorld disc, this includes people using modchips.
EDIT: You can also just update off the disc if you have a NTSC Wii and a NTSC copy of the game, it doesn't update your Wii to 3.4, just installs needed IOSes.
EDIT: You can also just update off the disc if you have a NTSC Wii and a NTSC copy of the game, it doesn't update your Wii to 3.4, just installs needed IOSes.