Step by Step Guide. Assume that the letter of your PSP drive is H:
Step 1: Go to H:\
Step 2: Go to H:\PSP\GAME and create a folder called UPDATE
Step 3: Copy EBOOT.PBP to H:\PSP\GAME\UPDATE
Now you are going to be dealing with the image files.
Step 4: Copy overflow.tif to H:\PSP\PHOTO
Step 5: Copy index.dat to H:\
Step 6: Copy h.bin to H:\
Now you are done copying files. Start up your PSP.
Step 7: Go to the Images section in your PSP and select overflow.tif. You will see a black screen with two lines of code. Leave for 30 seconds then yank out the PSP battery to restart it.
Step 8: Having rebooted, go to the Game section of your PSP and load the update file. If you're running 2.0, it's the second section from the right. Otherwise, it's the last on the right.
Step 9: You will need to have the AC adapter plugged in for the update to start. Run the update. The update will crash at 99%. Remove the AC Adapter, and pull out the battery to restart.
Step 10: Reboot PSP. You'll probably get some message about corrupt settings. Press Circle to restart the PSP.
Step 11: Run homebrew. Download this to save you the hassle of setting up apps. They go in H:\PSP\GAME
http://files.pspupdates.qj.net/cgi-bin/cfiles.cgi?0,0,0,0,38,899
That should sort you out.