HymenBuster , bad bad bad.. But anyway, you can extract the 2GB chip from the player and replace your 1GB with it
Here.
Regarding the smudge, you need to open the player and see if the smudge is in fact an LCD leak, if so, i don't think it can be fixed. The LCD leak exists between the LCD panel and LCD cystals, so you practically need to dismantle the whole LCD assembly. Which usually would solve the problem momentarily but would occur soon again.