Mount .ISO image as CD/DVD drive

On Ubuntu or any other Linux

There's a console way or a GUI way.

Mount by hand

sudo mount -o loop -t iso9660 my.iso /mymountpoint

GUI way

The best tool is AcetoneISO, supporting almost all kind of disc images. Read more about this tool in this separate post.

Add Gmount-iso from the application menu or install it by issuing
sudo apt-get install gmountiso

Just select the .iso image you want to mount, select a folder where it should be available and that's it.
Unfortunately, it seems to support only .iso images.

If you need to create .iso files, look at this post.

Integration into Nautilus

Some people have created scripts that can be launched directly from Nautilus on the .iso file. You can also look here for instructions with screenshots.

On Windows

Several applications exists, all supporting several other image formats apart from .iso

Virtual CDRom Control

From Microsoft there is a very small tool (~ 60kb) which can mount .iso and some other formats.
Read the Readme.txt about it's install and usage instructions.

Daemon Tools

DAEMON Tools is an advanced application for Microsoft Windows which provides THE best optical media emulation in the industry.
It supports the biggest amount of protection modes and image formats.
But it's uninstallation was quite bad some time ago, not sure if it is better nowadays.

Alcohol 120%

Alcohol 120% can also create several virtual drives and permits to mount images directly from the right mouse menu.
But it's main purpose is burning images to CD/DVD, supporting several protection modes either.
I recommend this tool, but it's not freeware.