Yes, "back in the day" mid 90s, I had a setup where I could use PC2Amiga with a parallel cable to access the PCs drives. I made an amiga native hard disk file on the PC and could save stuff to it. At that point UAE support for hard disk files was either non-existant or in very early stages, and I was really proud of myself for actually managing to boot UAE on the PC using that hard disk file that I formatted and set up from the A1200 over the parallel cable PC2Amiga link...
It was some wierd combination of using a compressed disk driver with a different device type, for a non-compressed volume file... been so long since I did it I forgot the details. I was without regular internet access at that point in time or I'd have posted the solution around, but by the time I got back online and looked around again, UAE had hardfile support.
I also managed to use the PC2Amiga setup to use and mount some Amiga CDs, but support of the formats was a bit touch and go on the PC side and some it wouldn't read, think that was down to the age of the CD Drive and lack of things like multisession support on it (Audio and data tracks on same CD) and failure of MSCDEX to handle some things.
It's my inderstanding however, that DMS files are bigger than the available space on the disk because they contain and preserve formatting information from the original disk. The disks are nominally 1MB in capacity, meaning 120K or so is sucked up in formatting information leaving a useable 880K. So just unpack it, it will fit. I guess no-one in here had the diskspare.device installed and formatted floppies to 960K. You could go that route too if you wanted I guess. Get diskspare device from aminet, decompress the image to a diskspare formatted volume, then unpack it to another disk.
I seem to remember that some magazine coverdisks had a smart implementation of ppack and DMS, where the ADF was ppacked and decompressed on the fly through the powerpacker library, and if the miggy didn't have the memory to do it in one go, it would write half the disk then ask for the DMS containing disk back, read the second half, then write 2nd half when you swapped it back in. Find an old coverdisk with several disks packed on it and look at the startup-sequence and other scripts for clues.
RW222