I used to be a great fan of Alcohol 52% and Daemon Tool. However, I just realized that due to the SPTD driver (http://www.duplexsecure.com/downloads), it will not install properly in Windows 7. Well to be fair, it kinda installed. but Windows 7 could never detect it was installed. As a result, Alcohol 52% keep trying to install this and does not go on...
There may be another tool thats works, but I am going to recommend using Gizmo Drive for now:
Gizmo Drive does something similar. It can make and mount images for more popular formats. Unfortunately, it does not has the copy protection features in Alcohol and Daemon Tool.
Until any of these can fix the Windows 7 problem, I guess we can use Gizmo Drive for now. Btw, its a freeware too.