Default settings should work, even in V4.0.4
I've got a perfectly working Warcraft 3 image from V4.0.4, before I upgraded (yesterday) to 4.32 and it works fine.
The image was built with default settings -
Fast Sector Read
Correct Bad Sectors
Fast Detection of Bad Sectors
1x repeat reads
No Compression
It came out at about 632MB, I've never seen something (I've got about 60+ game CD's ranging from brand new to around 1995/1996) that VCD has failed to make work or wasn't fixed after the problem was reported :)
Good luck!
- David Storey