I have used it with CD Architect and it works fine. The only thing you can't do is write cd-text. Other than that it works. Beware they appear to have went out of buiness so there are not upgrades but I have use it with xp, vista and window 7 32-bit without any problems.
I don't mean to sounds negative, but I had a terrible experience with a virtual CD-ROM driver about year ago. I was running Vista-32 at the time and opted for the virtual route instead of burning a downloaded ISO to a real CD.
The problem was the virtual driver was bad and it totally hosed my system because during installation it replaced major parts of the standard Windows IDE driver stack. It took me two full days of work to get my system back to normal.
So I'd suggest carefully checking the software supplier who made the driver and ensure it really is OK. Better safe than sorry I always say.