If PS1 and PS2 RETAIL games do not function, you have big problems. I tend to go with the install, but geez, to not play originals requires a major screwup. So, that suggests a laser problem.
Your first and easiest troubleshooting step should be to detach the POWER, GROUND and RESET wires from the chip, and try it again with originals. She works... your install is toast. She doesn't... time to find a new laser.
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Oshawa modder... up there in Canada.