Yes the PSP E1000 is compatible with remote play.
To setup remote play try the following:
1.) Connect the PSP to the PS3 using a USB cable.
2.) From the PSP systems home menu select ‘Settings’ then select ‘USB connection’
3.) From the PS3 systems home menu select ‘Settings’ then ‘Remote Play Settings’
4.) Select ‘Register Device’
5.) Confirm that a USB connection has been established between the PSP system and PS3 system then select ‘OK’
Please note that if you register a PSP system that has already been registered with another PS3 system, the registration with the first PS3 system will be cleared.
If you receive any error messages or get stuck, let us know where you are having any issues.
The error code you are receiving is a bit of an oddball. Let us see how we can assist you to get your remote play functions working.
A few steps to try:
Make sure the PSP is charged (Around 70% charge at least)
Try a secondary USB cable
If possible try a second PSP or perhaps a second PS3 system. (If you have friends with hardware that you can try out)
When connecting the PSP and PS3, try leaving the power adapter connected to your PSP
Try restoring PSP to default settings. (Settings > System Settings > Restore Default Settings)
Let us know if you are still having issues with remote play.