Try using DEAMON TOOLS (
www.daemontools.com).
I know with SIM CITY 4, you have to "eject" the current cd and put cd2 in its place. It's not a matter of simply having the image or contents in the same directory.
So, just mount CD 1 (using DAEMON), and mount CD 2 when it asks u for it.
I used to use ISOBUSTER too, but with DAEMON TOOLS I dont need to even bother extracting the damn thing, itll run automatically from the mounting image file.