Whew, what a mouthful in this thread...
Ok, so post up:
You'll probably wanna pipe that to less, or to a text file, let's choose less for the example:
If loop is listed, then we've now taken care of that, the loop device exists, so we move on.
Are you mounting as root? You must be root to mount. If you are root, we move on.
Your syntax, make sure it follows this format:
mount -t iso9660 -o loop /path/to/file.iso /path/to/mount/point
For me, here's what I get:
bash-2.05a# mount -t iso9660 -o loop test.iso /mnt/cdrom
bash-2.05a# ls /mnt/cdrom/
cdi ext mpegav segment vcd
Again, make sure you are root.
Check all those steps, if you have loopback support in your kernel, which you most likely do, this has got to work (without the requirement of a kernel upgrade).