@mitu The file has 3 lines, I just listed the one line I changed. The full file from the prebuilt image is...
lr-pcsx-rearmed = "/opt/retropie/emulators/retroarch/bin/retroarch -L /opt/retropie/libretrocores/lr-pcsx-rearmed/pcsx_rearmed_libretro.so --config /opt/retropie/configs/psx/retroarch.cfg %ROM%"
default = "pcsx-rearmed"
pcsx-rearmed = "pushd /opt/retropie/emulators/pcsx-rearmed; ./pcsx -cdfile %ROM%; popd"
this isn't the file from Retropie's prebuilt image. it does not default to pcsx_rearmed (standalone), so not sure what happened here, but good you got it sorted!