First, the word "psycho" is actually slang, so it's not proper to use in any intellectual discussion. The word you are thinking of is "psychotic", which technically refers to a person who suffers from or behaviour that stems from a psychosis.
The term "psychosis" is very broad and can mean anything from relatively normal aberrant experiences through to the complex and catatonic expressions of schizophrenia and bipolar type 1 disorder. In properly diagnosed psychiatric disorders (where other causes have been excluded by extensive medical and biological laboratory tests), psychosis is a descriptive term for the hallucinations, delusions, sometimes violence, and impaired insight that may occur. Psychosis is generally the term given to noticeable deficits in normal behavior (negative signs) and more commonly to diverse types of hallucinations or delusional beliefs, especially as regards the relation between self and others as in grandiosity and pronoia/paranoia.
This definition could easily be interpreted loose enough to include all people with wrong views or conceit, but as the term is used in modern psychology, it wouldn't actually include most "ordinary" beings. So, as with all terms, it depends on who is doing the defining.
So, that should pretty much answer your first question - "psycho" is slang, but "psychotic" could be used to describe a non-enlightened person, though it would be quite a bit broader than what is generally accepted to be the meaning of the term.
As to your second, fairly unrelated question, in regards to how it relates to your first question, the fact that ordinary people are mentally deranged means that sometimes indeed you will be unable to make them understand you. In fact, really the only one you should be worried about understanding you is yourself. There is nothing in the path to enlightenment that requires you to be understood by others.
