Have you tried making a disc image (ISO, BIN/CUE or other) and mount it using imgmount?.

Could you explain those processes to me? Sorry to be a pain but I'm new with Dosbox and all I know is how to mount drivers and install games.

You create the disc image with some software outside DOSBox, for instance ISOBuster, Isomagic and the like.

Nero can create disk images too but using its propietary NRG format. Maybe some other recording software can create ISO images. Right now, no free program comes to mind. Maybe some evaluation program might be used.

And you mount the image using imgmount inside DOSBox afterwards.

Thanks for the advice. I searched around on the web regarding disc imaging and I came across this on Dosbox Wikipedia:

http://www.dosbox.com/wiki/GAMES:System_Shock

I followed the instructions provided but the game just flat out refuses to work. My install directory is C:\DOS\CDrive\SSHOCK and I edited the CYB.CFG file and the CDSHOCK.BAT file in notepad according to my directory but with no result.
It just says 'illegal command: C:\DOS\CDrive\SSHOCK\cdrom\data' whenever I type in cdshock.
Does this method actually work and if so what am I doing wrong?

It appears the wiki instructions aren't taking into account the mount command.

After using "MOUNT C C:\games" the program wouldn't see the directory games which will look like C:\.

So in that example "cd_data_dir_path C:\games\sshock\cdrom\data" should read "cd_data_dir_path C:\sshock\cdrom\data".

You shouldn't need to edit anything if you copy the disc contents to a separate folder and mount that as D.

If you need more help with this, post your folder structure and mounting commands.

All my games are installed in C:\DOS\CDrive.

My mounting commands are:
mount C "C:\DOS\CDrive"
mount D "E:\" -t cdrom

If you could elaborate further on this issue any help would be greatly appreciated. The game itself does run smoothly but it always freezes when playing any audio log, email and even when Shodan taunts you. Its a small problem but one which I find dampens my experience. If there is an actual way to play the game without using the disc could you explain the process?

I make images of all my discs. Normally I use MagicISO but it was unable to read some of the files. Alcohol 120% did work. If you want to try another program search the image for INI-MT.XMI and INI-SC.XMI afterward. Somehow these files have 2 spaces after the extension.

For an image you would use
IMGMOUNT D C:\DOS\System_Shock.iso -t iso

If you just want to copy the disc to your harddrive go to E:\ and copy everything to a folder. Say C:\DOS\DDrive. Then change your command to
MOUNT D "C:\DOS\DDrive" -t cdrom

No need to edit files since either way the path will look like D:\ to the program.

Just tried out copying the contents of the disc to the DDrive folder, mounted the cdrom to C:\DOS\DDrive, installed the game to C:\DOS\CDrive and it works like a dream. No freezes so far and I've almost finished the medical level.
Thanks guys, you've been extremely helpful. Nice to know that this site has a good reputation.

Just one more thing. Now that the game has been installed to the CDrive sub-folder and plays from there, does that mean I can mount the cdrom drive back to E: and delete the DDrive folder?

Test it out first. You may have had trouble reading from the disc before. Try playing with the disc mounted for a while. If there are no problems you can safely delete DDrive. Or you may want to keep it as a backup for future use.

Played for about 2-3 hours now. No serious problems although the game did crash once due to an error. Other than that it appears to be stable. Thanks for your help again.