blah789

I think you can do it using MSCDEX.EXE and any (real mode) IDE CD-ROM driver you can lay your hands on.
You probably already have a copy of MSCDEX.EXE in your DOS folder (or maybe WINDOWS - it's been a while so my memory may be failing me). As for an IDE CD-ROM driver, I like the one that comes with Windows 98. It's named OAKCDROM.SYS. If you have an old Windows 98 CD it's in one of the CAB files (you can search through CAB files via Windows XP or Vista, just search the WIN98 folder for oakcdrom.sys). Like I said any other IDE CD-ROM driver may work (I used the Compaq one in the past: CPQIDECD.SYS). It doesn't matter where you put that file, but you have to specify the path in CONFIG.SYS. I'm going to assume you copied it to the DOS folder.
Then you just modify CONFIG.SYS and AUTOEXEC.BAT like this:
in CONFIG.SYS add the line
DEVICE=C:\DOS\OAKCDROM.SYS /D:MSCD001
preferrably someplace after device=himem.sys
in AUTOEXEC.BAT add the line
C:\DOS\MSCDEX.EXE /D:MSCD001 /L:D

Here's what all the mumjo-jumbo means. When you load the device oakcdrom.sys, the flag /d:mscd001 assigns it the name mscd001 (I just used the default name given on the Windows 98 boot floppy, but any other name works)
When you run mscdex.exe, you have to specify the device name you assigned earlier. That's what the /d:mscd001 flag does: it specifies the device name is mscd001. Then you have to specify a drive letter. That's what the /L:D flag does. I just put D, but any other letter after your last hard disk drive letter would work (so for example if your hard disk partitions had letters C: D: and E:, any letter F: and up would work). There's one limitation though. I don't know how high up you can go, but you can't just put Z for example. If you want to use a high up drive letter, you have to add another line to config.sys
LASTDRIVE=Z
that allows for higher letter drives (could be any other letter, but say you specified N, you couldn't create a CD-ROM drive with letter O or later).

Then you just reboot and start Windows and you should be able to access the CD-ROM drive in either DOS or Windows (just remember to click CD, use physical drive D in Virtual PC).

P.S: If you're not sure how to edit autoexec.bat or config.sys, use the edit command. Go to the root directory
CD \
then type
edit autoexec.bat
and
edit config.sys
to edit each in turn. You could also edit each of them using notepad in windows 3.1