Thanks, also I watched a video that showed someone with 3.10 OE entering recovery mode and setting the kernel to 1.50 before upgrading to 3.40 OE. Whats that all about? Do I have to do that as well? Thanks for the help.
In simple terms, setting the kernel to either 3.40 or 1.50 will decide where you place your homebrew.
If your kernel is set to 3.40, homebrew goes in the X:/PSP/GAME150 folder and regular stuff (let's say game demos) goes in the X:/PSP/GAME folder.
On the other hand if the kernel is set to 1.50 you can place your homebrew in the X:/PSP/GAME folder. Game demos would then have to be placed in the ms0:/PSP/GAME340 folder.
BTW if you don't have these folders and want to transfer over homebrew apps, just create them.