Many thanks for replying again. I see what you mean about the endless loop.
I think the main problem here is the wiki which misses out important information and which in some places is misleading or wrong.
As I see it, there are two separate issues: first, how to mount the image, and second how to play it when mounted.
First, about mounting an image:
The wiki says in Instruction 1 that the first thing to do is go to Tools - Options - File Types and check the box next to Disk Image Files. It says that if you leave the default setting at Automatic, MC "will mount the .iso into VCD (Virtual Clone Drive)." No it won't! Because it now turns out that Virtual Clone Drive is not an integral part of MC but has to be obtained from an outside source and downloaded and installed by the user. Also, having done this, will I then need to select External Program (Custom) and select Virtual Clone Drive or is MC pre-programmed to use Virtual Clone Drive by default, if the user has downloaded and installed it?
Another thing that doesn't make sense is that if I check the Disk Image Files box, every time I play a file, the system unchecks it again anyway! So it's impossible to keep the box checked and it appears to be pointless since it doesn't make any difference to the ability to play back an image.
Second, how to play back the mounted image:
At risk of being cheeky, it still doesn't seem to me that MC is using an outside app to play the image - it looks to me as if MC is playing the image. I say this because the playback occurs within the display window of MC, not in a separate window, and because if I go into Windows Task Manager when a video is playing, no other video-related app or background process is running apart from MC. Also, I don't have another app that's capable of playing a video from a Blu-ray image anyway! Unless there's an inbuilt process in Windows that I don't know about.
Another thing the wiki should do is tell users that they have to disable AnyDVD before playing back a Blu-ray image. MC recommends installing AnyDVD to play Blu-rays so it should also tell people they need to disable this if they want to play back an image. I found AnyDVD messes everything up and prevents ISO playback.
I know, I know - if the wiki is so bad, write a better one! But I don't know enough about it and can't get the thing running properly myself so I'm not the right person. Maybe one day...
Meanwhile thank you very much for the advice to download Virtual Clone Drive. I will do that and hopefully that will solve some of these problems.
Finally, is it the case that I can't stream multichannel over a home network to another PC? I want my Blu-ray images on the hard drive of one PC and I want to be able to play them back using MC on another PC connected to the same home network. (Not DLNA - just selecting the files for playback in Explorer.) Is this not possible in multichannel? Only stereo?