I'm currently running a PALWii with a Wiikey Installed (updated now to 1.9g).
When I first got the Wii I tried running some backups, burned on ritek discs, they worked a treat.
After a few months I updated the Wii's firmware and the previously working discs stopped working, I was getting 'disc unreadable' errors.
Now, I have backed up a copy of Super Mario Galaxy, the disc seems to work but occasionally will give a 'disc unreadable' error, but ejecting the disc and re-inserting the same disc gets past the error.
This has happened to a few ppl - it's possible the media you are using is now a problem for the latest firmware(s) (Ninty and Wiikey). Maybe try Verbatim. I have used Ritek myself but the burns are nowhere near as reliable and consistent as Verbatim for me.
No you can't downgrade the Nintendo firmware but I'm unsure as to whether or not you can downgrade the Wiikey firmware though. I have always assumed you could but it's not something I have needed to consider personally.
One other possible cause of your problem - perhaps a joint solder on the chip point has become dry (loose). I'd try other disks first though m8.
Well I was working in the Australian Outback in Australia's most isolated town. I had a wii flown out, then a few weeks later broke my leg.
My stuff was thrown into the back of the police 4 Wheel Drive and driven the 400kms across unsealed, rocky and rough roads to the nearest town, then driven another 1000 kilometres to my house. :)
In short, lotssss of up/down side/side movements over some of the roughest terrain in the world!
I'll try the restore discs, is that like the recovery disc, or the config disc thing?
The same thing happend to me twice :( once a while ago my wii fell on its side stop working so gave it a few smacks and a few taps and it worked lol
Then it happend again was about to play Harvey Bird Man didnt work, tried normal Wii games and it worked fine, no backup was working so i did it again punched it which didnt do much :( lol and but started taping it and around the case quite hard and it worked again so yay ^_^
Best Advice i can give is not move your Wii around 2 much really
Doubt many ppl are gonna beat the shit out of there Wii's but the scare tactics do work lol if its not working and you know it should and you cant be assed to get another chip in it, give it a tap around it try knock things back in place