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Hey Tim, did you find a solution to this - I have exactly the same problem. Tried multiple file combinations and mem sticks.  Appears to update fine, but no new game goodness on the carousel :(

Nope, not with TheC64 Maxi Game Tool.  I did however find Project Carousel USB (PCU) through TheC64 Community.  After a small learning curve,I have it up and running with all of my games plus more via a USB.  It is pretty awesome.

Bah ok, thanks for the heads up, ill do some detective work. Happy gaming :)

I've had the same problem. I also seem to have the additional problem of not getting it to boot past the language and Refresh rate screen. It's not dead, but something weird is going on. Any thoughts? I'm gonna try PCU. Thanks for that lead. :)