Hmmm my recollection was that the game searched through available "optical" drives looking for the disc. I don't think there is any setting that locks it to the install drive. You mounted the ISO with Daemon tools to a drive letter, right?
Long system spec sig follows:
PowerSpec G436 Lian Li ATX 205 MSI Z490 Plus Motherboard Intel Core i7 10700K 3.8 GHz 32 GB RAM DDR4 1600 Nvidia RTX3070