Ok just an upate as I think I fixed it and if anyone in future has the same problem in the future!

You must ensure that the drive letter of your 'virtual' cd drive is labelled before that of your real cd\optical drive.

I made my Daemon Tools virtual drive drive 'M' and my real optical drive 'N' and now wipeout detects that the CD is mounted in my virtual cd drive and I get in-game audio!