Wrong. If you have the capacity, it's ALWAYS better to leave a game as an ISO than a CSO.
The BEST case CSO scenario is that it'll run well and save you space, but this is only true of much older games. As PSP game development matured, UMD streaming/cacheing techniques were improved. Games that stream on-the-fly from the UMD and that are turned into CSOs run rather poorly in most cases, but work fantastically as ISOs. The compression conflicts with and slows down the streaming. Finally, Yoshihiro's Game Decryptor, which allows us to run 5.55+/6.00+ encrypted UMD games sometimes breaks with CSOs, but works fine with ISOs. Anecdotally, the symptoms persist even with the newer 5.50 Gen-D2 CFW that does on-the-fly decryption.
In short, CSOs might be a safe bet with older games, or if you have horrible storage, but it's rarely a good idea. The newer the game, the better the chances of compression causing issues.
When NPDecryptor finishes decrypting NP.PBP, it drops the resulting ISO in your ISO folder, conveniently enough. But two (IIRC) traces are left in the NPDecryptor folder. I forgot what they're called, but I think they're .BINs and might be headers of some sort. You'll probably want to delete those before you attempt to decrypt a new NP.PBP. If you're not too sure, just delete the entire NPDecryptor folder, and drop a new one from a clean download back on your memory stick.
I've never had your problem, so I'm not too sure if what I say above is the solution to it, but it's worth the attempt.
6501@release_610,v55286@release_610,20121221:
