I have a generic DOSBox shortcut that I originally used for launching Arena. The "Target" field of my shortcut is as follows:
"Program Files (x86)\DOSBox-0.74\DOSBox.exe" -userconf
There's actually a "Cee colon backslash" at the beginning of all that-- although not spelled out, obviously-- but I wasn't sure if including it would cause the forum software to insert a link, so I left it out.
The "Start in" field for the shortcut is "Program Files (x86)\DOSBox-0.74" (again, with a "Cee colon backslash" at the beginning), but that is
not where the user configuration file is.
The user configuration file is inside the "Users\myusername\AppData\Local\DOSBox" folder-- again, starting with "Cee colon backslash, and with "myusername" being whatever your user name happens to be. The name of the user configuration file is "dosbox-0.74.conf" (but it will probably be the only thing in that folder, anyway). You can open the user configuration file with Notepad if you want to view or change it.
I won't discuss any of the settings I changed, since you might want or need to use different settings, but I started with the default settings that were in the Arena installation package (which I got from Bethesda's site, not from UESP's site), and then tinkered with those until I had everything (mainly the graphics options) set to my liking. I will say that I like to make any changes in a manner that lets me see what the original setting was, in case I need to revert back to it, so what I do is copy a line before I change it and paste two or three copies of the line one after the other, "pounding out" the original and all but the last copy. Then I add comments to indicate the original setting, and change any of the extra copies (with appropriate comments) to show other settings that I want to try. The final, "unpounded" line is of course where the actual change goes. Here are some examples of what I mean:
# windowresolution=original <-- original
# windowresolution=1088x816 <-- try for Arena, Daggerfall, Battlespire, and Redguard
# windowresolution=1280x800 <-- try for Arena
windowresolution=1280x800
# output=surface <-- original
# output=overlay <-- try for Arena, Daggerfall, Battlespire, and Redguard
output=overlay
# memsize=16 <-- original
# memsize=32 <-- use for Arena and Daggerfall
# memsize=63 <-- use for Battlespire and Redguard
memsize=32
In any case, my user configuration file ends with statements that mount the desired folder as the DOSBox "C" drive, then switch to that "C" drive. I happen to use Dropbox-- along with OneDrive and iCloud, although I use those for specific purposes, and use Dropbox for general purposes-- so I decided to create a "dosgames" folder inside my "Dropbox" folder, and I've installed Arena itself in that "dosgames" folder. That way I can have Arena installed on my desktop computer, laptop, and cheap Windows tablet, play it on any of them, and my game will be saved to all of them via the Dropbox service. Therefore the last section of my user configuration file is as follows:
[autoexec]
# Lines in this section will be run at startup.
# You can put your MOUNT lines here.
# MOUNT C "driveletter:\Users\myusername\Dropbox\dosgames" -freesize 1000 <-- add for Arena, Daggerfall, Battlespire, and Redguard
MOUNT C "driveletter:\Users\myusername\Dropbox\dosgames" -freesize 1000 <-- add for Arena, Daggerfall, Battlespire, and Redguard
# C: <-- add for Arena, Daggerfall, Battlespire, and Redguard
C: <-- add for Arena, Daggerfall, Battlespire, and Redguard
Clicking on my DOSBox shortcut doesn't actually launch Arena, it just leaves me sitting at a "C" prompt. Then I have an "arena.bat" file set up in my "dosgames" folder so that I can launch Arena by entering "arena" at the "C" prompt.
I don't know how you've got everything set up on your system-- I haven't tried to install Daggerfall yet, either from Bethesda or from UESP-- and I'm not familiar with the "daghex" utility program. But if you configure DOSBox to start up at a "C" prompt, you might need to have a batch file in whatever folder is being mounted as "C"-- or possibly just place the "daghex" executable there-- so you can launch it from the "C" prompt. If the "daghex" utility has any command line switches that it recognizes, then you might want to go the batch file route so you can start up "daghex" without having to type in all of the command line switches each time.