McDragon said:make an iso of your game (with Alcohol, poweriso or whatever you use).
google: Yet Another GUI For PopStation v1.0, with this, you can turn any ps1 iso to a psp game format, after converting ff7 iso, you will have a folder near it with the same name as the ff7 iso, copy the folder into your PSP/game and you are done.
I'm having trouble getting this to work with my copy of FF7. I made the ISO with MagicISO. Then I used that Yet Another GUI for PopStation v1.0 on it. Finally, I copied the folder over to PSP/game. Now, when I try to run it, I get the warning screen and then black. Could I have screwed something up using MagicISO?