I have a similiar problem. When I play it from backup loader or backup disc, it runs fine until you have to do paint by squeeball, this is when you get a loading screen, then black screen hang up.
My set up is 3.2u, cioscorp ( preloader ) .28, softmii twilight hack. Cios38 rev14 Cios222rev4 37 merge 38 Cios223 ios60. USB loader GX rev792 set global to boot 222 anti002 error on.
The backup copy is a scrubbed copy by the way. This may be the problem?
Anyone without a scrubbed copy got it working properly?