Does the Device Manager display the device node for the new CDROM device? Maybe, the drive letter appears, but the window is not automatically opened due to disabled autorun?
I have the same issue. (WinCDEmu-3.1-8lang/XP Pro SP3/Dell Latitude D630) New Hardware is found. Tries to install the new hardware, then hangs. The “new hardware icon” stays in the taskbar and no corresponding drive letter shows up.