For those looking for a solution with a more recent version of Launch Box:
1. Tools -> Manage -> Emulators -> Mednafen emulator
2. Check "Extract ROM archives before running" (enabled)
3. Update your emulator application path to point to med.bat "FULL\PATH\TO\ROM\FILE" instead of mednafen.exe
4. In your emulator path, create the following med.bat:
@echo off
cd C:\Users\Arcade\LaunchBox\ThirdParty\7-Zip\Temp
for /f "delims=" %%x in ('dir /od /a-d /b *.ccd *.cue') do set recent=%%x
echo %recent%
"C:\Users\Arcade\LaunchBox\Emulators\mednafen-1.28.0-UNSTABLE-win64\mednafen.exe" "%recent%"