I Guess that you nedd to reformat your msd...
You need to go to:
Settings/System Settings/Format Memory Stick (do that on the PSP)
Then I guess that you will have all your files back but as expecting you will lose all your data (and the LCFW as well) ... I guess that's one way to do the process.
And then if you want to install a CFW I recomend 6.60 Pro B-10.
6.60 Pro B-10 Is a LCFW (Lite Custom Firmware) This one it's only installed in the msd so for example you don't need to worry about the creation of a PSN account.
I've installed the 6.60 Pro C but as this software is very recent it was some problems (for example this one can't load UMD).
I guess that i can tell you no more -.-
Be luck w that!!