FF7's file might not be an ISO but rather an ECM file. Use EP's ECM Tools to UnECM the file and make it become a Bin file which is usable by the ePSXe.
The download link for the tools http://www.emuparadise.me/PSX/ecm%20tools.rar for your convenience.
This link can be found on most of the PSX ISO's as it's common to make the disc image of the game into an ECM file for whatever reason I still don't know.
Layin down enjoying the fun unleashing the power of the sun and capturing them all until I'm done.