Sorry to bring up an older post.
But it's no secret that the C64 power supply is the cause of many destroyed chips in the C64. In fact, recently, the "8-bit Guy" destroyed some chips on his C64 as he was filming a video about some C64 peripherals.
From what I understand, the faulty PSU sends way too much voltage/current and many of the chips burn up.
There are a few solutions to this if you aren't going to build your own PSU. One is the custom built PSU's from Carlsen (just Google Carlsen C64 power supplies). They are a little pricey but many people on the Lemon forums recommend him.
I chose a different (cheaper) route and that was to buy a "SaV64" kit from someone on the Lemon 64 forums.
http://www.lemon64.com/forum/viewtopic. ... 9&start=60Her name is "SkydivinGirl".
The kit she sells (she also sells them assembled) is basically (from what I understand) an over-voltage protection circuit in a really nice enclosure. The device allows you to plug in your legacy C64 power supply and if it draws too much it will shut it down. The neat thing is that it also allows you to plug in modern "wall wart" type power supplies too. So, you can choose to allow the C64 PSU to provide AC only (which seems to be stable) and you use a modern DC PSU. Or, you can use a new AC and a new DC PSU through it. Granted, that would be TWO PSU's going into this device but it's a small price to pay for added safety.