I've played tons of games with DOSBox, and I'm mounting the same way as always--"mount c c:\iw."
as for installation, I'm just taking the contents of a zip folder and putting them in a folder, c:\iw. I ran setup, which is nothing but a sound card choice, and then ran the game. Nothing I haven't done before with other games, so unfortunately I doubt it explains much.
EDIT: If it sounds like the files are corrupted or something, I have another copy downloaded from a different source--but that one causes me a seemingly even worse problem. The download is an install exe, which I run (using DOSBox) and which unpacks the files into c:\iw. I then run setup and the game as described above--and in this case, it doesn't quite make it to playing the game--it gets to "initializing sound," and then hangs there forever. Again, it makes no difference which sound card I choose.