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It appears that subst only really works for swapping drive letters within a machine. For a mapped network location, subst makes that unusable. I.e. it can't find anything via that letter. That may be different from older Windows.

I also tried disconnecting the mapped drive letter and using subst to re-assign that to the local drive, but Windows 7 resolves the mapped drive to "\\machine\sharename\" and wants the second disk mounted there, and not at "Z:\"

It looks like I'm stuck with copying all the other disks over to the server, so I can mount the images in sequence. Or plan B is to upgrade another (XP) machine so it can handle DS development - I already have it installed there.