Your ISO/CSO games will appear there. Select the game and press Optimizing Your Experience (Adrenaline Menu)
Do not put ISOs inside the PSP/GAME folder; that folder is reserved for PS1 Eboots and PSP homebrew. psp iso adrenaline
Once your ISOs are running, you can tweak the experience to look better on the Vita’s high-resolution screen. Your ISO/CSO games will appear there