The virtual drive for daemon tools and MP need to be the same. Right-click the daemon tools tray icon and look at the Virtual CD/DVD-ROM. it should read something like "Device 0: [H:] empty". Ensure that these are the same settings in the MP Configuration-General-Daemon Tools section. In my case the, the Drive Number would be 0 and the Virtual Drive would be H:. Hope this helps.
I'm also in the pipeline to start adding some dvd .iso and .img's to my movies share and I have a question concerning daemon tools.
Why do u need to set daemon tools to mount your DVD images for playback? Does that give some improvement? I can playback my isos and imgs straight away in media player classic with proper codec, couldnt that be set up the same way in media portal as with .mkv's etc?
Allthough, I have some problem with DVD menu navigation this way, but maybe that can be solved with some dvd navigator pre processor/codec?