Hmm weird, try running PAD in admin mode just in-case, and just to make sure, when using the image action, you're selecting like a box around the image, not just a pixel of it right? (This can easily happen, I'm just being thorough)
Another thing you can do is to use OCR to find the text of the application and move mouse to that location and send a double click, this method will require you to make sure your VM is not in focus as a window though. And if that doesn't work then it might be an issue with the VM just in general (I've tested several of these things in the Azure one and they seem to work fine)