Got it working with only Daemon Tools
 

I was able to get this game to work without hiding anything using the built-in emulation in Daemon Tools 4.03HE. This is for the 1.0 version of Stubbs, I haven't tried this method with the 1.1 patch yet but I don't see why it wouldn't work. I didn't need to disable any extra CD roms.

1. Mounted and installed the game in Daemon Tools 4.03HE by mounting all 3 CDs in a seperate virtual drive. The install detected the other CDs by itself without prompting for their location(Note the image for the first CD was the mdf/mds type)
2. Left the first CD mounted and unmounted 2 and 3. Made sure all emulation options are enabled in Daemon Tools.
3. Made a shortcut to Stubbs.exe and changed the compatability to Windows 2000
4. Launched the shortcut, saw the little Securom CD icon for a few seconds then the game started up fine.