There is no "ISO folder" on the PSP's visible storage by default. The PSP does not mount ISOs as files in USB Mass Storage mode—you only see it if you've installed Custom Firmware (CFW) and created it yourself.
The PSP appears as a removable drive with these folders:
/PSP/GAME/ – Homebrew, demos, signed apps (EBOOT.PBP)/PSP/SAVEDATA/ – Game saves/PSP/SYSTEM/ – Browser bookmarks, network settings/MUSIC/, /PICTURE/, /VIDEO/ – Media files/ISO/ – Only appears if you have CFW and a plugin (like ISO Tool or UMD Dumper) created it./ISO/ folder on Memory Stick root (or use /PSP/GAME/ for CSO files).⚠ Legal Warning: Downloading ISOs you don't own is piracy. Dump your own UMDs.