ndsplayer19576 
modmii is the best and simplest way to update your Wii, whats not to understand it will update the cIOS's accordingly without you looking for those and installing those individually it is also kept up to date it also prevents you from getting fake or infected cios & ios files
I have no idea if the sys folder has caused the issue or not, but I do know it is not needed, I use the software that comes with DIOS MIOS to convert my GC iso's, it's up to dateand it does not create a sys folder and the iso's give no issues, older versions of DIOS MIOS may of needed those but as I started on v2.6 then it must of been for a pre v2.6 version
Compat list mentions no problems with that game either, so sounds like a user end error to me, I would remove or move the sys folder, if that alone does not help reconvert the iso or don't convert it at all, you may need a better copy as well, but compressed iso should sort the files and align them correctly, only time I can see that not working is if the iso and or gcm (same file format) was compressed in the past badly (there was a lot of badly compressed gamecube games back in the day of streaming games to the gamecube)
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