This sounds like an issue I've heard before with PSP emulation, though not the exact symptom you described. It has to do with an ASM edit I incorporated into the mod. I created a version without it so you can try it below:
http://www.rpgdl.com/LFT/LFT_NoRSMLimit.ppf
Or if you want the Complete (WotL translation):
http://www.rpgdl.com/LFT/LFT+Complete_NoRSMLimit.ppf
Let me know if that works for you.
Just chiming in to say that I was having the same issue -- freezing when setting/removing abilities -- and LFT_NoRSMLimit patch fixed it. I am on PC using Mednafen emulator, basic setup and minimal tinkering with settings or anything. I am not an expert at this stuff and literally set it all up today for the first time just to play LFT. I have used ePSXe in the past and considered setting it up again to see if that resolved the issue, since that seemed to work for above poster and another source I saw. Doesn't seem like the issue is related to EBOOT or PSX2PSP or PSP emulation or any of that but just the emulator used, specifically Mednafen (and Retroarch I think? Which uses the same cores), and is probably fine in ePSXe.
Is it ok to just continue using this "NoRSMLimit" version of the patch? Or was that just a test to diagnose the issue? (which it did lol)
Is using the NoRSMLimit patch going to break or be missing any of the "core" LFT content and experience? And should I go out of my way to set up and use the ePSXe emulator instead with the actual LFT release?