Although PSXLoader says fw 1.9 and up, it worked on FW 1.6. You need the ORIGINAL SM 3.6+ or SM coder 3.8. A compatible USB device (this is the hard part, PSP works) and a PS2-compatible PS3... so it doesn't work on the 40gb PS3.
1. Download the Elf Loader
2. Get an USB pen drive (or PSP) and connect it to your PC
3. In the Root make a folder which is called SWAPMAGIC
4. Copy and Paste the file named ''SMBOOT0.ELF'' into the folder SWAPMAGIC
5. Copy and Paste the folder PSXLOADER to the Root of your pen drive (or PSP)
6. Download one or two of the elf emulators
7. Put the ELF in the folder PSXLOADER
8. We canít give you these files: files LIBSD, XMCMAN en XMCSERV. Youíll need to search a bit for them.
9. Put the just downloaded files LIBSD, XMCMAN en XMCSERV in the folder Modules whichs should be inside PSXLOADER
10. Download the Ulaunch Elf
11. Put the folder BEDATA-SYSTEM en SWAPMAGIC in the root of your pen drive.
12 Start your PS3 with the Pen Drive connected and start Swap Magic
13. Press R1 and arrow-up on the d-pad.
14. A menu is presented go to Configuration
15. Go to the folder host and hit the filebrowser
16. Put in an original PS2 DVD an go to the option cdfs. Search for the file usbd.IRX and press R1 the copy it. Go back to the root folder MS0:/ and press R1 make a new directory named: BEDATA-SYSTEM put usbd.irx in there.
17. Quit the game and start Swap Magic again. Now hold L1 and arrow-up
18. In the menu search for the elf you want to start (emulator)
19. Hopefully in will now work!!!