So, can anyone help me out with my problem? Still here.
I know you already did this, but let's review. Here are the aforementioned steps: (Before trying make sure you are in Japanese locale/or using Appolocale. I just used Japanese locale.)
1.Mount the ISO and install (Enter the product key; check the bottom of the second page in this thread if you can't find it. When mounting, if daemon tools fail, use something else like Virtual Clone. I'm using it.)
2.Copy the Nodvd patch over the original exe file in the place where you installed it. (If you having problems moving it over, make sure you right click-properties-add admin rights to the folder;Full control.)
3.Download the Antibat patch (antifail in otherwords) and move into the Chaos;Head installation folder and run it. Follow and read all the instructions carefully.
4. Then play it.
Trust me, if you follow all the instructions in the readme you shouldn't have much of a problem.
EDITED:...And these steps do work for Windows 7. I installed it on my system and it is running without problems.
Just move the Anti-fail patch to the place where you installed Chaos;head, and install it. When it asked for either HARD or SOFT subs, I just entered Hard (exactly as typed) and when asked for the license question, all you need to enter is trick question (exactly as I did. No caps, no quotes, and needs to be spaced.) After that, just follow the rest of the instructions which are self-explanatory.
I suggest you start from reinstalling the game, meaning to remove it and reinstall it to avoid any problems. Like aforementioned, if you follow the read-me, and do exactly as it ask, you will be fine.