1) Install/update to one of the latest 6.60/6.61 Custom Firmwares
2) Press the SELECT button and set the USB Device to 'UMD Disc'
3) Now connect your PSP to a PC and enable the USB Mode in the Settings category
4) Copy the .ISO which will always be called UMD9660 to the PC
Optional) Use this small W.I.P. tool to automatically adjust the ISO via drag & drop