There are a few guides around that are either not written well, that the original author's English isn't that great or are a bit technical. Also you could be really unlucky and have an ISO image split into about a billion files which I'm still not sure on how you add to get it to run (sorry about that). Also a great help was this image of the PSP folder structure, (previously we'd stuck it in the game folder and like a dunce wondered why it didn't run... Doh and double Doh).
Enough waffle, this is the list of stuff you'll need to get ISO support on your PSP.
First of all some obvious stuff.
A PSP WITH CUSTOM FIRMWARE. (this is important)
A Memory stick Duo pro (the bigger the better, unless you only want to add a few games)
An ISO or CSO image of any game you legally own. (theres a few programs to back up you UMDs now though we've never used them).
First of all you'll want to either link your PSP to your PC in USB mode, or if you run it from the mains like I do and have a card reader, take out your Memory Duo card and put it into the correct slot (mine says MS/PRO/ PRO DUO). A box should appear on your screen with your folder, open it up and go to step 2.
|Foreground your folder, Background IFM W00t.|
See that picture above, your card should look like this (minus the ISO folder), now right click and add a folder and name it in ALL CAPS as ISO.
Don't open any of the folders and add it there, IT WILL FAIL. It needs to be added to the main folder of your memory card.
With the ISO folder created, open it and add a folder called VIDEO (all caps again) this is where you'll add all of your UMD movies (I think, I've never done this myself and yes its entirely pointless watching films on your PSP).
Still in your ISO folder, search on your PC, for the folder where you store the ISO / CSO files, open that folder and drag across a game to your ISO folder. It should take awhile to copy across unless its a mini title, where it should take a few seconds.
Uncable your PSP (or take out your memory card and put it back in your PSP) and go to Games, Memory card in the menu. If all goes well your ISO should show up in your games folder, click on it to play.