If no one gets an answer i will check my manual when i get back to school in a few days, but i believe you can get up to 128mb. You have to make sure it is the same format and all of that good stuff. Like i said i am not 100% on this though.
AFAIK, you have to record them from a disk while both the memory stick and the CD are in the unit. Once again, i'm not completely sure as i basically read over the manual once and then just went for it. Haven't tried anything crazy like the memory stick, just regular *** cd's
you can use Open MG to convert to atrac3. You can use any size media as long as it is what it is able to read. For example: Memery stick only for memory stick and memory stick pro only for memory stick pro.