Wait, you're asking for support for the MagicEngine emulator? You have better chances of getting help on the official forum:
http://forums.magicengine.com/en/index.phpBut anyhow, there's a few things to try off the top. Check the log.txt that's written to everytime you run pce.exe. That can give you a clue as to if sound support is being initialized properly or not. Secondly, with daemon tools, right click the red tray icon on your bottom right tray bar, select options, and make sure "Analog audio" is checked. If it is not, that's typically why you wouldn't be getting CD-DA audio when playing a mounted disc image. This is with Daemon Tools 3.47 or less. I dunno how it is with the newer versions. Thirdly, you gotta use CD player software and insert any music CD or what have you, and make sure you can play any audio track. If you can't play a CD with CD Player software, then it's not going to work with MagicEngine either, so fixing there, will fix it for MagicEngine. There is a cable that's supposed to connect your CD/DVD drive to your sound card also for analog mode. If that's missing, that's another reason why it wouldn't work.
*takes breath*
Another thing, make sure you're booting with a REAL System Card 3 and not the Magic System cards as they cause sound problems and aren't 100% reliable. You can get those from here:
http://rigg.servegame.com/software/SYSCARDS.rarJust put them in the same folder as pce.exe and it'll recognize them. Finally, make sure you're using the latest emulator, verison 1.00 PR 10. That would be this:
http://www.magicengine.com/files/me100-english-pr10.zipWas that the version you were using to begin with?