Under the .ISO entry in the HKEY_CLASSEDS_ROOT location, I created a "OpenWithProgids" key, and inside it added a string "Windows.IsoFile". I also created a key called "shell" (it was missing too), but left it with the default string inside.

I then opened File Explorer again and the option to "Choose default program" was there in bold, and Explorer.exe was an option. I chose that, and ISO are now mounting normally from the OS.