PAL versions of Parasite Eve 2 are copy protected: NTSC-US versions wouldn't be copy protected, as that was never done with US issues, but may be mod protected. The reported behaviour, that of locking up at the intro screens is typical of protection.
It's essential to have a drive that reads the subcode from the CD for pSX to be able to defeat copy protection, and to be using a driver for this that supports subcode reading: Window's IOControl doesn't, although the Linux IOControl drivers do (coincidence?). Or if you're playing from an image, it must be in a format that includes subcode, i.e. .ccd/.img/.sub or .mdf/.mds, and, obviously, you'll need to have ripped it with a drive that reads subcode. The applications that rip to these formats, CloneCD and Alcohol, use their own drivers, so the IOControl driver isn't a problem there.
As a rule, -RW drives usually read subcode better than -ROM drives; whether they're DVD or CD drives, or their age, is fairly immaterial.
For playing from CD, if your drive supports subcode reading, the best driver to use is probably ASPI: download
wnaspi32.dll from Nero if you're using an NT based Windows (or google for ForceASPI version 1.17 if you're using Windows 9.x and install that - don't use the wrong driver for the wrong OS!), and put it in your pSX directory. Then select ASPI reads on the CDROM tab of pSX' configuration.
That should deal with PAL copy protection; for mod protection, it's not quite that simple. Although you need subcode reading to defeat it, you'll find that the game goes to a warning screen because the protection is now working and identifies the emulator as a modchipped Playstation. However, it seems that using a PAL BIOS fools the mod protection; many mod protected games can be played this way.
Alternatively, many protected games can be patched instead; you need the correct patch for the game version, and it needs to be a protection defeating patch, not a PAL/NTSC converter or a trainer. Not all patches work, either, and your image will have to be good for effective patching. You can, however, patch images or CDs on the fly in pSX; either from the command line, or the easiest way is to use
Ultima's pSX Frontend and include the path to the patch in the game's profile.