Gunblade, have a look at laser calibration. Whatever answer you are given results in further academic questions. Something is wrong and we need to get to the bottom of it. I haven't got those games and when I do get GTA3, it will be the original DVD (PAL to play on my OrigaChip JAP PS2!). You'll get answers as broad as they are loing.

But one thing is clear - you've experienced a hardware incident and you are now reporting a string of sysmptoms that may be due to bas rips or laser calibration or mis-performance due to the cause of the burning smell. Current suspect is laser calibration. Get on with it please and then we can move to other possible causes. Better still, take the thing into a PS2 repair centre and see what they say.