I have the similar problem... I've checked the cue and I have this:

FILE "MERCENARIES_DOSWIN.BIN" BINARY
TRACK 01 MODE1/2352
INDEX 01 00:00:00
TRACK 02 AUDIO
PREGAP 00:02:00
INDEX 01 25:27:24
TRACK 03 AUDIO
INDEX 01 27:33:70
TRACK 04 AUDIO
INDEX 01 29:37:46
TRACK 05 AUDIO
INDEX 01 31:41:15
TRACK 06 AUDIO
INDEX 01 33:51:35
TRACK 07 AUDIO
INDEX 01 36:01:19
TRACK 08 AUDIO
INDEX 01 38:11:36
TRACK 09 AUDIO
INDEX 01 40:12:51
TRACK 10 AUDIO
INDEX 01 42:16:21
TRACK 11 AUDIO
INDEX 01 44:28:08
TRACK 12 AUDIO
INDEX 01 46:31:64
TRACK 13 AUDIO
INDEX 01 48:35:42
TRACK 14 AUDIO
INDEX 01 50:39:54
TRACK 15 AUDIO
INDEX 01 52:49:55
TRACK 16 AUDIO
INDEX 01 54:57:50
TRACK 17 AUDIO
INDEX 01 57:00:27
TRACK 18 AUDIO
INDEX 01 59:02:69
TRACK 19 AUDIO
INDEX 01 61:00:18
TRACK 20 AUDIO
INDEX 01 63:06:27
TRACK 21 AUDIO
INDEX 01 67:23:13
TRACK 22 AUDIO
INDEX 01 68:48:23

I can't mount the cue file, only the bin.... DB.74, and I use Virtual Clone Drive as my image mount tools...

Edit: I spoke out of turn. Here's the thing. I used to have the game and it got lost so I went and found a copy... I had been renaming my images to make them DB friendly and when I read that you're not supposed rename them it's like Oh really, Doubt this will work but ok... I tried it, Merc Dos/Win CD, and as long as you open the cue with Notepad and verified the Audio tracks, like the one I have just above you can simply copy the file to a central location for DB (Root of the Mounted C: is best) and if you don't rename, mount the cue and everything is set