I found one solution to the problem I posted.

Here's the problem:

Testing Nero Recode 2.2.6.1.

Have Alcohol 120% installed and Nero ImageDrive.

When creating virtual CD(DVD) drives using either Alcohol 120% or Nero ImageDrive, and when mounting an ISO of any DVD image, Nero Recode will not transcode the virtual disc in the virtual drive - of either type.

When you get to the final process where it's about to do it it says always "...please insert the original disc..." in drive such and such.

It works fine with non-encrypted discs in my physical DVD drive. But it won't transcode from any non-encrypted virtual discs in any type of virtual drive I've tried so far (created via Alcohol or Nero).

Note that DVD Shrink has no problem working with virtual discs in virtual drives.

Nero Recode is supposedly directly based on DVD Shrink. So I don't know if this is a bug with Recode, or something on purpose.

All the Nero Recode tests I did were with non-encrypted virtual & real discs.

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And here's one solution I found:

I did find a work around for instances where I have an ISO on my hard drive rather than a VIDEO_TS folder, and for where I want to use Nero Recode instead of DVD Shrink:

Step 1: Mount the ISO to a virtual drive.

Step 2: Bring up a command prompt (cmd) in W2K (and presumably XP) and type in:

subst x: y:\video_ts

Where x is some unused drive letter and y is the drive letter for the virtual drive you mounted the ISO onto.

Step 3: Run Nero Recode and use the "Import DVD" option. Specify drive x: instead of Y:\video_ts. In other words point Recode to the substituted drive letter.

Now Recode won't tell you to insert the original DVD in drive y:. Instead it will transcode using drive x:.

DVD Shrink does not have this "bug" and so is perhaps preferable to Recode in this case. But some have claimed that Recode does a better job at transcoding than Shrink does. I haven't seen much difference though so far, but I wanted to try it out.