Spyro 3 (Year of the Dragon) is protected, so you need a ppf patch to play the it correctly. Get it here.
You two options of using this file btw:
A) apply it directly (make a back first!) with ppf-o-matic to the IMG (actually a .bin image)
B) Use the auto patch feature of ePSXe: Unzip the PPF on the ePSXe "patches" subfolder, then rename it eactlly as the executable file of the game. It should be named like this, on the root folder in the CD: SCES_#.### or SLES_#.### (replace each # for the corresponding number)