You can bypass the audio flex. Some of us are doing this. You can see the info in this forum if you look for it. You will need to buy a few parts. I got mine pretty quickly.
I am HOPING that Dan will add the ability to place a colored border around the image with the Ps1digital so that it will function with the Sinden Lightgun directly. That would be fan-freakin'-tastic. What do you say, Dan? Can this be done, please?
I thought I was having a similar issue but it was related to my television talking to the ps1digital through HDMI due to updates in the 1.5.2 firmware. I fiddled with TV and got it working again. It has to do with a new setting in the new firmware to make the ps1digital work with tv remote, etc.
I already ordered the parts. It seems this is a problem with this flex cable. I was able to find that we can order a replacement set of flex cables for $20 but the issue is likely to repeat and I bought the parts I need for about $12 and this solution is more robust.