If you have the full version of quake (both paks) then i would think you would want to use one of the mmc versions and put the paks on your memory card in /quake/id1. (note this is actually something like /media/mmc2/quake/id1) And yes you would have to make those directories on the memory card yourself. Just make a quake directory, an id1 subdirectory, and drop the paks in the id1 directory. If your memory card is formatted in fat32 then case (capitalization) should not matter.

I guess you installed the ready2run version which put shareware pak in internal device memory. Putting another pak would waste too much precious internal memory. If you own a memory card then install the mmc2 if the card is internal or mmc1 version if its in external slot.

If users boot off of mmc card or have a new n810 then you have all kinds of space in internal memory so the paks can be put in the main ready2run directory at /usr/lib/sdlquake/id1.

To run it from the command line you should run :
sdlquakepxd <options...>
-or-
sdlquake <options...>

Finally i'll point out that all of the 800 installers have the identical sdlquake executable, they just launch it with different command line base directory. If you want to do that yourself modify the /usr/bin/sdlquakepxd and/or /usr/bin/sdlquake scripts to set your base directory.