Download the following package with usbhostfs/usbhostfs_pc compiled for psp and win32:
Note: usbhostfs/psplink is released under the bsd license, and i'm not affiliated with their authors. If something go wrong while using dax ziso with their files, don't disturb them.
Also, from this page:
locate and download the file libusb-win32-device-bin-0.1.10.1.tar.gz
Extract both of them to, for example, usbhostfs_bin and libusb-win32-device-bin.
Copy the file usbhostfs.prx from usbhostfs_bin/usbhostfs_psp to ms0:/DAXZISO.
Open the daxziso.ini file, and locate the entry "[HOST]", and change the following:
driver = null changes to
driver = "ms0:/DAXZISO/usbhostfs.prx"
name = null changes to
name = "USBHostFSDriver"
And the type = USB, leave it as it is.
Save the file.
With the psp connected to the usb, open daxziso. Windows will detect a new driver, ignore it by now and DO NOTHING. Open the file inf-wizard.exe located in libusb-win32-device-bin-0.1.10.1\bin.
Choose PSP Type B, and click next, and again next. It will ask you where to save a inf file. Save it in the same directory (libusb-win32-device-bin-0.1.10.1\bin) with the name "psp.inf".
Now, in the windows driver dialog that you have previously ignored, choose manual installation and locate the directory libusb-win32-device-bin-0.1.10.1\bin. Windows will install the drivers. Exit daxziso.
In the folder usbhostfs_bin/usbhostfs_pc create a folder called ISO and put inside you iso or dax files (note: put it a name you can distinguish, because dax ziso will list both, files from memstick and files from computer).
Note: some people have reported to me that by unknown reasons, there is more chances of the iso working if you put one of the last letters like "v", "t", etc before the name: for example, Nba.iso -> vNba.iso. or tNba, etc
I know, it sounds weird, but if the file starts with one letter from r to z, it has more chances to work, and it's confirmed by me and other people.
Now, open the usbhostfs_pc.exe and if the firewall asks you to give it permission, do it (it's only local connections). Now open again daxziso with the usb cable, and select the iso of your pc that you want to play, and configure it with one of the methods "Direct Load", "MPHGL Direct" or "RUNUMD Direct" (the rest of others won't work at the moment).
Now, you should be playing the iso of your pc!! Note: in some cases, the real UMD is loaded instead. This may be becasue of driver inestability, this will happen with some isos and won't happen with others.
IMPORTANT: When you are not gonna use the usb thing, edit again the daxziso.ini file, and put again driver = null, since having the usbhostfs.prx loaded may decrease the compatibility of modes MPHGL Direct, Direct Load and RUNUMD Direct.
I hope i haven't forgotten nothing since the first time i installed usbhostfs with psplink was far ago.