I never tried a virtual drive, but I would expect it to work. Try burning the iso to disk, assuming you are playing the game on something with an optical drive. If you are on a netbook, try an external drive, if possible, just to check if the iso itself is the problem, or the virtual drive program.
The person with the DVD version had a problem after installing the CD version patch because then the game started looking for the Play CD (the disk name and/or and path to the video files having been changed for the DVD version).
