1.) Best firmware with latest write strategies, at least for me is 2.C8 from TDK with NEC id, more info about it and download is available in TDK 1616n v2.C8 SE -> NEC ND-3500A v2.C8 SE release!
2.) There are a couple of flashers, but Binflash
is most safe and easy to use. You will probably want Win32 GUI
version. It can dump and flash, but I never tested it with USB drives. Author says it should work fine, but most safe way is to attach drive to IDE cable and flash it, if you have any doubts.
3.) I have no idea about DVD sound problems. Auto-Booktype is supported with 2.C8 firmware, read thread above for more info. It basically means it will show as DVD-ROM instead of DVD+.... to standalone players and all other applications which read that setting. This can enable some picky players to play movies instead of rejecting them.
2.C8 firmware linked in TDK 1616n thread comes with Binflash 0.92 and I recommend you to use latest from Binflash page, 1.02 or above, especially if you use it with USB. Also you may check The Dangerous Brothers
page for DOS flasher which can be used to recover bad flashed drives, but stick with Binflash since its easier and it works with Windows. After flashing restart PC.