Usually you get a black screen when you have a missing or outdated IOS. I get a black screen with NTSC channels that have been converted to PAL or region free. I am also using a 4.2e system.
The fact that your gettign a DVD error message makes me think that its the chip, but since I am on full softmod I don't really know.
I have heard that some of the newer games do have problems when played off disc, and usb harddrive seems to be more sucsessful, althogh I must confess that I have had more than my fair share of faliures - lol.
Perhaps you should try and play the games off usb instead ?