Looks like you resovled most of your issues your self.
The message you were getting when it said 'File ready to be written to disc' was not from the Nero software, but from Windows XP's Engine.
And I was not aware you did not have Admin rights, or logged in as Admin. You can not use any CD Recording software unless you have Admin rights.
And writing an Image file will never write to a Recorder, it will only write to the Hard Drive, as your Hard Drive is the Image Recoder. And since you were not logged in as Admin, you had no option for a Recorder, only Image Recorder.
Basicly, you were in a vicious loop.
You should not have this issue in the future, now that you know you need to log in as Admin, or be given Admin Rights using Nero BurnRights, in order to see any Recorder to write too.