: To save space, ISOs are often converted to Compressed ISO (CSO) or DAX formats. While ISOs are uncompressed, CSO uses a compression layer that remains playable on the console.
Once connected to a PC via USB, you must create a folder named ISO (all caps) in the root directory of your memory stick. This is where your .iso and .cso (compressed ISO) files must be placed to be recognized by the system. Psp Iso Archive