Do you have that retail disk installed on your USB/SD? I'm thinking that the retail disks will still work if DM sees it on the mass storage. It is still read from the disk at that point, because if you eject, the game complains and tells you to put in back in.
I've not tried loading a disk that wasn't also on my USB though, I've ripped my entire library.
EDIT: OK. Forget what I said. I dig through my boxes of games and found one that I didn't rip (Pac-Man World 2)
I put the disk in, selected it from the disk channel on the Wii Menu, and it launched. I still got the DM splash screen, but the game ran just like normal.