well after you have dumped your umd into an iso you must make a folder called "iso" on the root of your memstick and put it in there
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He may be talking about playstation 1 games.
You rip those using your CD ripping tool of choice, convert them using popstation, and then place the folder you get in the PSP/GAME340 folder. Or PSP/GAME, depending on the kernel version you have selected.
i was on about normal psp games,
when back up you get iso image
you have to do what i said for psp iso games