Okies, against all odds, I've got it working.
I'll give a run down in case anyone else has problems with starting this game which has a link in the ISO Cellar.
I was doing everything wrong before. To start with, you only need burn one of the images to CD rom. You're presented with an mdf and a mds file. when I examined the contents of these files in ISO Magic, I saw they both had the same files. So I burnt one of them to a CD rom. I ran the install exe by mounting the mdf file with ISO magic, I think, and this gave me another folder with the Shadoan bat file. This is the file needed to play the game. Then you run the set up exe to set your sound and vid options. It ran ok from Windows Vista.
In the Doxbox config file, I pointed the top line of the mount file instructions to the first folder containing the Shadoan bat file - as the install program had automatically installed it - like this: MOUNT C C:\INTRPLAY
and then gave the CD Rom drive letter and command on the second line of the mount file instructions.
This comes down the bottom of the dosbox config instructions - here:
[autoexec]
# Lines in this section will be run at startup.
MOUNT C C:\INTRPLAY
MOUNT E E:\ -t cdrom
Hope this all makes sense.
Shadoan is a great adventure game which is well-worth a play.