Okay, So I'm going to try to be as thorough with this as possible, because it is a very annoying problem which I have spent hours trying to fix with no result.
When I first downloaded Daemon Tools Lite v4.40.2 onto Windows 7 64-bit, the install worked fine. The problem surfaced almost immediately, when I clicked "Add Device". The little notification bubble popped up saying it was installing the driver, but almost immediately failed. This happened multiple times so I started troubleshooting. I went into my security software (Comodo Antivirus) and noticed that some weird thing with DT at the beginning was being blocked, so of course I selected it and put into the trusted section. This didn't help, so I tried disabling my security completely but still nothing happened. Here is what my device manager looks like right now, completely messed up:
Now, when I try to add another device (SCSI Virtual Drive) I get the error message "You already have the maximum number of virtual SCSI drives." I tried uninstalling the DT drives in device manager, but I still got the same error. When I go into device manager, do a right click, and select "Scan for hardware changes", the four previously uninstalled drives then all attempt to reinstall, and all fail one after the other. When I right click these broken DT drives and select "Update Driver Software", I get a window with two, big, fun buttons. One saying "Search automatically for updated driver software blablabla" and the other saying "Browse my computer for driver software". I tried the former. It searches for about six seconds, and then tells me that windows has determined it is up to date.
I think that's a good amount of information to get started on, and I can't wait for a response. Please and thank you.