UPDATE: Have installed DAEMON Tools V3.29 and now I have no more problems with CD1. So Heilongx, hope this will help you too.
I have the same problem. Only CD1 does not load. First the swirling logo of dreamcast is shown. Then a messagebox ioControl error. Then the dc bios is loaded (Just like there is no game mounted)
ISO:
Kalisto - Perfect Shenmue 4 CDs
Using
Chankast_alpha_25
Virtual Daemon V3.47
On a WinXP SP2