I can confirm this. I mounted an image of one of eharmonica’s discs [ripped with DVD Decrypter] and DVDFab doesn’t recognize the disc in any mode.
I mounted a DVD-Audio disc image made by DVDFab in clone mode, and it is recognized by DVDFab immediately.
I mounted a DVD-Video disc image made by DVD Decrypter and it is also recognized immediately.
However, I mounted a disc image I made myself with Adobeman’s DVDA GUI, which also contains no content in the VIDEO_TS folder, and it is not recognized.
It seems like DVDFab is looking for an IFO file, but specifically in the VIDEO_TS folder and no where else.