This happens for me as well, I think it's a general issue. The installer comes with DOSBox 0.73, so if you have 0.74 it doesn't recognize it. I was able to get around the problem by installing DOSBox with the game, then deleting the DOSBox version 0.73 that it installed (I think it puts this in the same folder as the games). Then you just run one of the games, and it will say it can't find dosbox.exe, so then you point to your 0.74 version of DOSBox, and after that it works fine. In other words, install the game first, then install (or point to) the new DOSBox to replace the older DOSBox that it comes with. Using this method does not affect the .conf files for the games, so you can still edit those to change window size and cycles (useful for the fast text in MM1) or anything else.
There is allegedly an advantage to using 0.74 to play MM1 as it partially fixes some issues with text going by too quickly. I finished MM1 before DOSBox 0.74 was released so I can't comment on that myself. There's also a fan patch to fix the text speed, which I did use, and can be found in other threads on this forum.
It would be great if GOG could fix the installer to recognize newer versions of DOSBox though, so we don't need a workaround on each install to get it to use newer versions.