Virtual CDR driver [closed]

Phantom Burner does exactly what you're looking for, the only downside is that it's not free - $29.95.

Phantom Burner is a virtual CD-R/DVD+RW/DVD-RAM/BD-RE/CD-ROM/DVD-ROM/BD-ROM emulator. It extends the ability of Phantom CD by adding burner emulation. It not only allows you to mount disc image files as virtual CD, DVD or Blu-ray discs, but also lets you create disc image files by burning to the virtual CD-R/DVD+RW/DVD-RAM/BD-RE burner drive, from using any disc burning software.

Here is another one, even costlier then John's burner ($39,95).

Virtual CD

The Virtual CD program not only lets you create virtual drives-you can create virtual CD burners, too. A VCD virtual burner can be used with any Windows application just like a physical CD/DVD burner. You can put together your choice of CD content, even video DVD material, and burn it on a virtual CD. This is a great way to test the results without wasting a physical blank. And that's just one example of the possibilities.

A virtual drive that has been configured as a burner can also be used as a virtual encrypted hard disk. All you have to do is insert a virtual DVD-RAM in the virtual burner, which has the same properties for reading and writing data as a hard drive, and activate the optional encryption feature. Absolute data security, easy as 1-2-3!

and another one ...

Original CD/CDRW/DVD Emulator

Original CD Emulator now works as virtual CDRW drive.

Original CD Emulator is shareware (USD 34.95), try before you buy.

As ~quack mentioned, ImgBurn should work quite well for building images.