how in the world do I narrow that down to code
This is the *only* important part in ROM hacking: finding what byte(s) you need to modify. Using a hex editor is exactly the same as using a text editor like notepad. I imagine what you want will probably just take modifying one or two bytes in the whole ISO.
So, how would I try to find it:
0. Start the game in Original Mode.
1. Find the X position of the main character.
1.1. Open BizHawk's "Tools"->"Ram Search".
1.2. Move character a bit to the right, search "Greater Than" "Previous Value".
1.3. Move character to the left, search "Less Than" "Previous Value".
1.4. Stand still, search "Equal To" "Previous Value".
1.5. Repeat until you're only left with the real X-position's address in the result list.
2. Use an emulator with a debugger: pSX, MAME, no$psx, one of the PCSX mods, Mednafen, etc. (I prefer MAME.)
3. Set a memory write breakpoint at the X-position's RAM address and stand still.
4. Wait until an enemy hits you. If there's an horizontal knockback, it will write a new X position to our RAM address we found and it will trigger the breakpoint.
5. Take a note of the pc (Program Counter) in the debugger. Or even the ra (Return Address) to see what called the current routine.
6. Open IDA Pro and open the game's executable file. Go to the position(s) you took note of in step 5.
7. Repeat all steps from point 1, now in Arrange mode (maybe finding X *and* Y position now, to make sure we trigger the breakpoint when we're hit.)
8. Find the difference between modes in step 6.
9. Figure out what needs to be changed in the code and insert it with ARMIPS.
You will need to know some basic MIPS assembly, of course. Just keep this document open while you read the ASM code: http://xifanie.ffhacktics.com/zodiac/PSX-INST.txt
If you intend to keep working on this, I have an ultra secret Discord server dedicated to PSX hacking (and translating) where I could help you in real time with more details. Let me know if you're interested and I'll send you the invite link.