I imgmounted the .iso, ran the game

What about installing the game first?

i have carma working without the cd or an iso -
copy the entire cd to the (installed) carma folder on hd,
then you have to edit the paths.txt file in the \data folder so that it points to the carma hard drive folder as the location of the cd drive.

the paths.txt is encrypted so you have to use this:

http://www.thesprayshop.net/dls/C1_dls/Carmagedit.zip

im still getting Insert Carmageddon CD