You need Disk Copy to work for most OSX programs so I'm not sure how you're dealing with others. You can see my Disk Copy settings below.

Did you try to manually drag & drop the dmg onto Disk Copy?

Select the LW.dmg file & go to file menu & choose get info. What is the default program suggested to open it? Mine is DiskImageMounter.

Have you done a Safe Boot & Repair permissions lately? SAFE Boot & Repair Permissions