chicken

I get the exact same problem, convert the music to .wav first and it should upload fine. (not a perfect solution but it works for me...) I think it's an mp3 codec problem, but I have tried several without luck.

Done... The USB port itself is not powered (maybe because the PSP dosn't support USB OGT Host mode at the moment.) However the two small holes to either side of the PSP's usb port are actually DC out connectors... I measured only 0.07V DC off them (and there's no mention of what voltage they are ment to be in Sony's docs) so I it seems to just be a low power out for small USB addons, I know the Talkman USB mic addon uses the DC power out connectors, but unless the voltage is selectable somehow I don't think it will be much help.

Most likely you have the audio codecs in ffdshow enabled, which by default set themselves to high priority overriding most other codecs, so most apps will try and use it to do decoding of mp3's ect. You can disable it by running ffdshow audio decoder config in the start menu and disabling it's support for mp3 ect. (or uninstalling / reinstalling ffdshow and unticking all the sound codecs in the install options)