You're close but not quite doing it right...
In Disk Utility, highlight the CD device (not the volume name, which is indented below the device), then from the "Images" menu, select "New" and then select "Image from (disk1)" where (disk1) may be disk1, disk2, etc.
Then, under "Image Format," select "DVD/CD Master" and "Encryption" should be "none."
When it finishes, you should have a disk image... to burn that to a CD, simply drag the disk image file from the Finder into the left-hand sidebar of Disk Utility (if it doesn't already appear there), then click "Burn" and it should make a perfect copy.