Isn't Lands of Lore 2 a WINDOWS game or does it have ms-dos executables?

It has both MSDOS and Windows exes.

(If this is a problem with actual dos, as opposed to dosbox, then please ignore this post.)

No problems for me installing, but I did need to use the -label with the mount to get the game to recognize the cds when playing.
I was going to suggest making sure that you had mounted a c drive, and making sure to use the '-t cdrom' when mounting the cd, but when I tried that it produced entirely different errors.
About the only thing I can think of is playing with -freesize when mounting your c drive in case your drive is too large and dosbox is having trouble recognizing it.
Or perhaps making sure that your directories can be written to wherever the c is mounted at.

This game installs and runs fine for me on images I made from my cds.

Heres the mounting line :

imgmount d n:\iso\lol_cds\lolcd1.iso n:\iso\lol_cds\lolcd2.iso n:\iso\lol_cds\lolcd3.iso n:\iso\lol_cds\lolcd4.iso -t iso -fs iso

Nothing special about it...I do know that AVG finds a file associated with this game that it thinks is a virus and it will quarantine that file...don't know what happens to the setup process if that happens. If you had already installed and were redoing the config maybe this is possibly something to look at.

Thanks. That worked great. Now installed. What a game 😀