(removed my original post, or at least most of it)
Based on your first post, it seems like you did mount everything correctly. It almost seems like the game somehow refuses to recognize your CD as valid. I don't remember if L3D does any sort of copy protection. (Not to say the CD isn't genuine or anything, but maybe that the copy protection, if any, doesn't really work inside DOSBox's emulation.)
Did you try Simon's suggestion? Specifically if the CD has a SETUP.EXE file, you should run that instead at some point and see what happens, either before or after copying all files to hard disk. If SETUP.EXE runs, you may also want to try Simon's suggestion of turning off CD music with a hard disk install, and see if that will make the game stop complaining about the CD.
Finaly, you could still refer back to the DOSBox readme to see the different mount options related to CD-ROM drive, and try them out to see if any of them might help. Though I feel like probably not, since based on the output messages it produced, it seems like the game is only looking for MSCDEX driver and did find it, so it would seem that the CD drive is correctly mounted in DOSBox.