During our recent Vista tests, we came across a bug in the Vista installer that prevented us from installing the OS onto VMware using an iso image of Vista. The OS booted normally for us from an iso image, but then complained about not having a driver for the virtual DVD/CD drive from which we’d just booted.
The error message that Vista coughs up is, “A required CD/DVD device driver is missing. If you have a driver floppy disk, CD, DVD or USB flash drive, please insert it now.”
Here’s a workaround, which we pieced together from a handful of VMware web forum posts, and tested with the RTM Vista release and VMware Server 1.0.1.
Steps to get Vista installed on VMware Server using an ISO image:
1. Configure your Vista VM with two CD drives, the first pointed at a real CD drive, the second pointed at the Vista iso image. Configure both drives to “connect at power on,” and make sure the “legacy emulation” box is not checked for your first CD drive.
2. Boot up your Vista VM with no disc in the physical drive. Your VM will boot from the Vista iso image.
3. Once your VM boots, click “Next,” and then “Install Vista.” When you hit an error about Vista not having a driver for your CD drive, alt-ctrl out of the VM and go to “VM,” “Removable Devices,” “CDROM 1,” in the VMware Server console menu and edit CDROM 1 to point at your Vista iso image. You don’t need to change CDROM 2.
4. Click OK, and Vista should proceed normally.
I’ve only tested this so far with VMware Server, but I imagine the procedure will be the same for other VMware products.
UPDATE: Once I got Vista installed this way, the system still wasn’t recognizing my CD drives. I switched my first drive back to point at a physical CD drive with legacy emulation switched off, rebooted Vista, waited for the OS to recognize and install a driver for the drive. Once the system had installed a driver for that first CD drive, I was able to point it at the iso image on which the VMware tools are stored and install those tools, which I had to do in order for Vista to recognize my virtual NIC.
After rebooting, however, Vista still did not recognize my iso-backed CDs, so for now, I’ll have to play the physical-to-virtual switch game to connect iso images as CDs or DVDs to this Vista VM. At least my NIC is working. Here’s hoping that VMware (or, though probably less likely, Microsoft) manages to fix this annoyance soon.

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