ePSXe 1.6.0 is very out of date and would not play CDDA anyway unless you burn or mount the image, this was also noted in the guide
tested ePSXe 1.6.0 and it does indeed freeze at the Now Loading screen if it does not see the CDDA tracks
ePSXe 1.6.0 can not see the CDDA tracks from Run ISO but works just fine from Run CD-Rom with the disc mounted in Daemon Tools Lite
P.S. I uploaded a full collection of modules over at http://www.epforums.org/showthread.php?90067 for use with popsloader
I would be inclined to trust the info there but the v4 is kind of 50/50 with pops
6.20 also lets you play this game though
I tend to hit the 5.XX firmware for playing PSX-PSP converts myself but I do own a 2K PSP a 2002 model to be exact