I suspect what you have may actually be fine. My .iso files also behave a bit like archive folders when I double-click on them in Windows: I can navigate inside them as I would with a zip file. (I see a BDMV and CERTIFICATE folder at the root level.) There is no .iso file as such inside this “archive folder”, because the .iso file already is the archive folder.

What puzzles me is why you can’t mount your .iso files. Are you using Windows 10? If I right-click on one of my .iso files, the first option in the context menu is “Mount”.