Edison Format · March 2010
The ② effect can only negate cards, not effects. It can also only negate cards which target exactly 1 Psychic (and no other cards).
The ② effect can negate cards which target Psychics anywhere, even in either GY.
You can chain the effect of "Thought Ruler Archfiend" when a Psychic-Type monster in the GY is targeted.
The effect of "Thought Ruler Archfiend" can be activated during the Damage Step.