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The error about the last readable sector is one of those errors which occur with cdrwin which doesn't seem to make logical sense much like the warning about 4 second tracks. I have seen many warnings of 4 second tracks with cdrwin although most of the time the  shortest track on the disk wasn't even under 1 minute.  In these cases cdrwin probably interprets one of the 2 second pregaps as an actual track. If Cdrwin displays the "GREEN mode 2 data track circle" do the following:
Right click on it and it should display the starting and ending time of the track and to the right of this the LBA which is the sector starting and ending "logical block address" (LBA). When you can see this you know that in can in fact read all the sectors from beginning to end and that this is a mistake on cdrwin's part. I have never received this error with an original disk regardless of how poor of condition it was in. I have however received this message a few times when reading a copy of a copy. What I have done in these cases is one of the following things which has always worked: When you receive the error click finish again and see if it starts reading it. This will work quite often. 
If that doesn't work try ejecting the disk and reinserting it to refresh it and when you try again it may read it. Try adjusting the Read Retry Count - Specifies the maximum number of times to retry a failed read operation. (This feature is not supported by all CDROM devices). Finally as a last resort try rebooting your computer to clear any information from your system which may be causing the problem and try again.

The first step is to choose no when it asks if you want to continue after the 4 second message. Check the disc to see if the game really has any tracks under 4 seconds. 99% of the time you receive this message the disc won't contain any tracks under 4 seconds. You can right click on the "RED" audio buttons that appear after you select copy disc and that will tell you the length of that particular track or you can use your computer's CD player and go down through the tracks to see there length. If there isn't any tracks that are actually under 4 seconds go back and change the Analyze Subcode Option of "AUTO" which is the default setting to "FIXED" then repeat what you normally do. With fixed the audio subcode won't be analyzed like it is with the auto setting and cdrwin will immediately start to read the disc to hard drive without the warning appearing. If the game does in that rare case contain a track under 4 seconds then you will have to edit the cuesheet in a specific way to get around this or you can use a sound editor to add enough extra time to the track so it will be larger than 4 seconds. If you choose to continue after you see the warning without changing any settings then cdrwin will read the disk to an image file but when the cuesheet is loaded in will be rejected and an error message will be displayed.

The following is from the Cdrwin help file: Windows 95/98 Tips Check the settings for all CDROM devices: Open the "Control Panel" folder and click on the "System" icon. Select the "Device Manager" tab. Click on the CDROM icon. For each CDROM device in the list. Select the device. Select the "Settings" tab. Disable the "Auto insert notification" option. Enable the “Disconnect” option. Enable the “Sync data transfer” option. Click on "OK" Windows 95 Caching The following tip can greatly improve CDROM recording performance under Windows 95. This could prevent buffer underruns and other common problems from occurring. By default, Windows 95 does excessive file caching. This is a waste of CPU time, memory, and possibly disk space, since you will never go back and use anything in the cache. To fix this problem, do the following: Open the file SYSTEM.INI with a text editor (this file will usually be found in C: or C:). Find the section of the file called "[vcache]" Add the following lines after the "[vcache]" line: minfilecache=512 maxfilecache=4096 Save the file changes. Reboot your PC. File/Disc Caching We strongly recommend that you enable the file/disc caching feature on the Devices and Settings screen. This feature will greatly reduce the possibility of "buffer underruns" and also make efficient use of your CPU and other system resources. Description File/Disc caching (also known as "cyclic buffering") is the most important performance feature that has been added to CDRWIN this year. It will greatly reduce the possibility of "buffer underruns" and also make more efficient use of your CPU and other system resources. On most systems, you will not be restricted from running other programs while a disc recording is in progress (even at 4x recording speed). Now you can use your word processor, Internet browser, or other favorite application while your disc records safely in the background. Important Note: The performance of the cache is determined by the speed of your CPU, harddrives, SCSI adapters, and other critical system components. Don't expect miracles when using non-Pentium systems, old harddrives, or ISA based SCSI cards (especially when recording at 4x speed). Cache Settings Enable Caching - Enables the caching feature. Enable Debug Log - Enables the debugging log file. This option should only be used if you are having a major problem with the caching feature (the debug information will be written to the file C:.LOG). Please contact Golden Hawk Technology before using this option. Cache Size - Selects the size of the cache in megabytes (the minimum size is 1Mb and the maximum size is 32Mb). Recommended cache size based on the amount of memory on your system: System Memory Recommended Cache Size:16 Mb1 to 2 Mb32 Mb2 to 4 Mb64 Mb4 to 8 Mb128 Mb8 to 16 Mb256 Mb16 to 32 MbWarning: Do not use cache sizes larger than the recommended size. This can cause performance problems that are worse than not using the cache at all. Full to Empty Ratio - Selects the percentage of the cache that must be read before the cache is filled again. Example: If the ratio is set to 85% / 15%, then the cache will be filled to 100%, wait for 15% of the data to be read, and then be filled to 100% again (this cycle will repeat over and over again until there is no more data to be cached). This algorithm is much more efficient then trying to keep the cache completely full all of the time. CPU Priority Level - Selects the CPU priority level of the caching thread. For 99% of all systems, the "Normal" setting is more than adequate.

Unfortunately Playstation CDs are heavily copy protected. Nevertheless it’s possible to create copies of most Playstation games.
What you need is: A MOD chip, which must be either soldered into the Playstation. A CD recorder capable of burning CDs using the „disc at once“ method. About 700MB of free drive space to store a CD image file.
If  you have ALL that proceed as follows:

Start Nero, Insert the Playstation CD in your recorder Choose the menu command File->CD Copy Select the page Copy Options and uncheck the on the fly option. Select your CD recorder as input device and choose (for safety considerations) 1x as read speed. Open the page Read Options and select (if these options are available for your recorder): „Read media catalog number and ISRC“, „Continue copying“, „Data Mode 1“: „Force Raw reading“ „Write uncorrected“, „Data Mode 2“: „Force Raw reading“ „Write uncorrected“, „Read audio with subchannel“, „Ignore read errors“ and uncheck „Jitter correction“. Open the Image page and choose a harddrive drive with at least 700MB of free disk space. Select the page Burn and choose (for safety and accuracy) 1x as write speed. Click the Burn button