I think it's deffinitely something with the button. I built an arduinoboy recently to use it only for LSDJ master mode so I didn't use any button or LEDs. Arduino kept cycling modes before I changed the program to use it's "fixed mode" setting.

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(41 replies, posted in Nintendo Handhelds)

I have no experience with LSDJMC2.
I am using Arduinoboy to sync LSDJ with drumachine and for that it works great (LSDJ master sync).
Also very easy to build - especialy if you only need midi out like me. It's basicly only arduino + connectors.