Please post as version 11 file.
It would be better to post this question in the appropriate discussion forum:
http://communities.ptc.com/community/mathcad/calculus_%26_des?view=discussions
The problem is that you have lambda1 and lambda2 defined on the right hand side as simple variables, not functions of Psi.
The function should have its parameters present within the given equations i.e. lambda1(params) etc.
It is only within the odesolve itself that just the name, without parameters, is used.
Philip