I've also seen posts like yours on other sites.
I'm using 3.40 OE-a and the game works perfectly.
It was also working under real 1.50, 3.03 OE, 3.10 OE and 3.30 OE...
Can you give me more informations about your psp?
Are you using custom XMB or RCO plugins?
Maybe you could try to place the game in the MS_ROOT/PSP/GAME folder?
Tell me please so I could fix the game or write an addendum to the readme.