Long time no see LEGO fans. I've recently revisited the game again now that I'm settled in a new space and wanted to share with those how to play the game in the current age. I know it's been tough with needing separate programs and that sometimes fps would drop to 30 even though you have it capped at 60, etc. I ran some tests of my own to see what all is needed again. Correct ISO, correct tools.
First off, you no longer need Daemon Tools, fortunately current day ISO's can run like an exe. (Link to ISO)
You still need to cap the games FPS to 60 for it to work properly and remain in the rules. So we are still using something like DxTory, which fortunately you just need the free version of (Link to DXT)
Here's the link to the Mod Loader that we use to skip loading screens, and fix resolutions, etc. Even some cosmetics. (Link to Mod Loader)
Once you have all that, double click that iso file and say "open". It'll mount the game to a new digital drive and you can install the game as normal from the files there "Setup". Once you have it installed, you can literally play the game as normal right there.
Wherever you installed the game too (For default I believe it's in C > Program Files x86 > LEGO Media) you can drag and drop the contents of the mod loader zip file into that same folder where the game is. MAKE SURE TO RUN THE MOD LOADER AS ADMINISTRATOR EVERY TIME.
Inside the mod loader, you can set it to windowed mode, set a new resolution for yourself, turn on load screen fix to skip all the loading screens, and even the intro videos if you want.
Finally when you open DxTory, make sure to lock the FPS to 60 for LEGO Island 2.
Finally, launch the game, and enjoy. Have fun reliving those memories and/or speedrunning the game!