bump. I just want to know what the Pscx_rearmed config file points to as system_directory so that I can use that directory for the bios file...

Good news guys! I had to dive into the emulator source code, but I figured it out. It turns out, the programming for pcsx rearmed is a little bit screwy. It is supposed to find the home directory (/home/pi) and then create two folders (.pcsx and bios) there. Instead, It just creates those folders from the current working directory. So, there are two options:

1) Super Easy, but will get removed with the next update:
We are calling the emulator from /home/pi/pimame/pimame-menu, so if you look in there, you will have 2 folders (.pcsx and bios), just put the correct bios into the bios folder, then load up the emulator.

2) Pretty Easy, Changes will stay:
edit /home/pi/pimame/pimame-menu/config.yaml
find the 'Playstation 1' section
edit the command to look like this: cd /home/pi/pimame/emulators/pcsx_rearmed && ./pcsx
run the emulator once (so that it will create the folders) then put the bios file in /home/pi/pimame/emulators/pcsx_rearmed/bios

Done!