I had the same problem and could not find a solution anywhere and the only way around it was to uninstall daemon tools and any registry entries (if you go to the daemon website it will tell you which entries to delete), then reboot and do a fresh install of daemon tools, I also had to do the same with alcohol 120 (once again go to the website forums to find out which registry entries to delete) to get the virtual drives working again.
Hope this helps.
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