I normally use Slysoft’s free program VirtualClone Drive to mount ISO’s. It isn’t necessarily a better program than Daemon Tools, in fact it is quite simple in comparison, but it works consistently for this one purpose.
Is your copy of WinDVD fully updated?
A better program for playback of blu ray on the computer is Arcsoft TotalMedia Theater 5. This is not a free program, but there is a free trial to test it, and if you look around the net, there is usually a 20% discount coupon available. You need a commercial program to access menus in blu ray.
If you don’t care about menus or extras, I find Media Player Classic Home Cinema to be the best of the free players. It will playback the main movie, and you can play individual m2ts files also.