I found that you can play gamecube disc via Neogamma as well. So if for some reson you need priloader set on region free wii games, you can still run your gamecube discs.
That's not true. Try it for yourself.
NeoGamma will load and play Gamecube games only if region free is turned off. Same as the Disc Channel.
If region free is turned on and you attempt to play a Gamcube game with NeoGamma it starts to load then crashes. On my system it just shows a screen full of green lines. I don't know the technical term, but I call it video gibberish.
Maybe it is because I am running priiloader v0.2 (r30), but I just checked it again to be sure. I have region free wii games as well as channels enabled and I can run gamecube games via neogamma.
I get the green lines, but then it runs the game. I did disable my region free settings and everything ran in the disc channel just like you stated. With the exception of a different version of priiloader and having USB Loader GX installed, our Wii's are modded exactly the same, so I'm thinking it might be a priiloader issue.
Originally I never messed with the region free channels option. So I decided to retest with that option on in combination with region free games on & off. What I found was pretty much the same... If region free Wii games is on. Then Gamecube games won't work. The option for region free channels made no difference. It didn't effect the loading/reading of Gamecube games whether on or off. I thought that having it on with the other one, like you have it, might make it work. But no.
So I suspect Priiloader v3 Is the issue. And sence I'm not going to try and install an older version... Especially now that I figured out the fix. It is what it is.