I think Warcraft CDs have CD protection of some sort on them, so you need to use software that can bypass that or create perfect copies when creating images, such as CloneCD. You'll also need to emulate one of the protection modes in Daemon Tools, though you'll have to look up on the Internet which one Warcraft uses for it's discs.

As for it not being recognised as being in the drive, I think that's a bug in Autoplay in Windows (certainly on older versions of Windows), and I think turning it off in Device Manager and/or TweakUI helps. What version of Windows do you have anyway?