I'm still unclear on what you're trying to do. Are you trying to copy a cd? Are you trying to "create an image". You say you are trying to create an image, so you want the .bin or .iso file on your hard drive right? Or do you want the .bin or .iso to be stored on a blank CD in .bin or .iso format? If you are just trying to copy the cd, use the burner as the source drive with Nero. Make sure that the place it will temporarily store the image is on a drive with enough blank space.
If you are using windows XP, you might want to go to control panel, administration, services, and disable the cdrom burning service, it's useless if you are using nero, and plus is makes nero open up slower. Also, you might need to download the newest ASPI layer/drivers if you
are using winXP.
Don't know if this would matter or not, but try toggling DMA for the burner and see if that fixes the problem. Let us know if you are still having troubles.