for selfboot dc games the 1st_read.bin needs to be scrambled
for non selfboot it needs to be unscrambled
There is a program called scramble.exe that allows to scramble/descramble. As you can see the purpose of this program is to do exactly what you're trying and also the opposite.
The program can be found on
http://mc.pp.se/dc/sw.html (look for 1ST_READ.BIN scrambler- A program to do the neccessary scrambling of the binary file on bootable CDs. Run with -d to descramble)
It needs to be compiled first, if you dont want to bother with that i suggest you download it from somewhere else. I remember Dc Factory comes with compiled scramble.exe or i could email the program to you since its fairly small...