IT doesn't seem to work at all on 1.7.0, but I downgraded to 1.6.0, and it works perfectly. Thanks alot! I can finally continue playing Parasite Eve.press the esc key to return to the GUI and either do file>change disc>cdrom or file>change disc>iso (depending on what you are playing the game from). on 1.7.0 you might have trouble doing the latter because of a bug however this can be worked around by doing the disc swap with the actual game discs or by doing the swap on a previous version of epsxe.
edit- the thread below contains alot of other information on how to do certain things with the emulator along with how to set it up correctly. you might want to read over it just in case you have any other questions about how it works.