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found this disc on my travels, hopefully a fixed f/w will sort this.
text taken from elsewhere:
The new Cars Race o Rama game disc contains a new video partition (Wave 4) Anyone with iXtreme firmware version 1.6 will need to use the activate.iso disc to enable booting of wave 4 games.
You can expect all games in the near future to be wave 4 (Modern Warfare 2 for example).
This does not affect people with 1.51 firmware