If you want to explain the steps you took when using VGMToolbox, I can try to recreate, and hopefully fix, the problem. The more details the better, including screenshots and real file paths.
If not, download the PSF2 Starter Kit here: here. All the info needed to make PSF2s is in that kit.
Ok I will tell you step by step what i did. I did use that guide. Im doing Haunting Ground.
I acquired the: MODHSYNTH.IRX MODMIDI.IRX LIBSD.IRX from the game
I put it in a folder with the other IRX that came with the stater kit including the PSF2.INI I made.
Next was the SQ HD and BD
I put the DATA.CVM from the game into VGMToolbox "ISO/Archive Extractor" and got a bunch of audio folders. One is called BGM. It contain the SQ BD and HD of the music. I take one of the 3 matching ones and and put it into a folder. I give them all the same name as the SQ.
Now I go to make a PSF2 set the folder directories and get this message: "S4_NORMALB.psf2 created. Could not find file 'C:\Users\Miles\Desktop\New folder\S4_NORMALB.psf2'."