First I must stressed that this method was originated from Spook and it has proven to work for me & others as well.
Also, make sure you have CDGENPS2 VERSION 3.0! I tried these exact steps with V2 and it never worked.
So here it goes ...
1. Extract the ISO using ISOBuster.
2. Open CDGENPS2 V3 (I edited the volume to ?MGS3_DEMO?)
3. Drag in SYSTEM.CNF first
4. Drag in SCUS_973.39 second
5. Drag in the MGS folder third
6. Drag in the sce_dd folder last
7. Generate the CD Image (I chose ISO as the output format, final size should be around 630 to 680 MB)
8. Transfer to PS2 HD (I used Winhiip 6.2)
9. Play with HDLoader (no modes required)
10. Go to "Playground" and select "MGS3"
PS: All other videos/trials/demos you see on the Menu do not WORK !!!
SCPH-30000 v4 (Jap), Origa Modded, AR2 v2.01(Jap), Network Adapter SCPH-10281 (U/C) , Maxtor HDD (DiamondMax Plus 9/160GB/ ATA 133), SCPH-50002SS (Satin Silver with DMS4EZi chip), Nintendo DS, Sony PSP-1000K