Microsoft has a little known and free virtual drive emulator that works great. It's very small and lightweight but officially only works with XP, unofficially with 2000.
Free Virtual CD ROM for Windows XP
Follow the "read-me" file exactly and your all set.
There are three tricks with this free emulator:
1) It only runs on XP and unofficially Windows 2000.
2) Your CDs have to be converted to ISO files.
3) Most types of copy protected CDs cannot be used by the emulator.