CaiusCaligula, that's one of the newer problems with Win7, you sometimes 'see' a lower drive letter whilst in reality in the system it's still another one. Win7 sometimes lies, you could say.
Eventually another solution for those on a modern OS: Dosbox 0.74+Win3.x.
The game runs fine in it and you can mount the ISO directly as D:
Use setup16.exe in dosbox+Win3.x and allow quicktime to install, game won't run without it.