What firmware are you running? Original PSP firmware or the 'hacked' version? If you are running on the original firmware, you can't play the ISOs ripped by Popstation. You gotta change it ('downgrade') your firmware to one of the hacked firmwares (Dark Alex's version for example).
Compression wise, you can either leave it as it is if you have a larger MS (4gb), if you have space issues, then you can use some compressors to compress it, depending on the ISO, some may save you a lot of space, and some just 5%.
Well, nothing is free and nobody is gonna spoonfeed you information, so you gotta put in some effort to find the information in order to play the ripped games.
Rite I got the afternoon off today, so might do more searching online. I mod my PSP last month to play CC, but how do u chk the firmware version on the PSP?
My cousin mod it thru another person for me, I've to ask him later.