How to use update & DLC in rpcs3?

I think I stumbled upon the bug you're mentioning using my Guitar Hero III disc
We'll be looking into this

Manual dev_bdvd mounting is needed, and this is not an user friendly thing to do at the moment.
For now you have to boot the updated EBOOT using Boot (S)ELF with dev_bdvd manually mounted to game path.

For example, I have the game on discs/BLES00134-[GH3]
Then I just modify the dev_bdvd line on config.yml to be the following:
/dev_bdvd/: $(EmulatorDir)discs/BLES00134-[GH3]/
But you still need to force dev_bdvd to be mounted, which isn't possible out of the box.

It will be fixed to automatically work in the future.