One of the new features / bug fixes in the Virtual Server SP1 Beta release is that we now support the use of ISO images that are over 2.2GB in size (yay!).
A number of people have wondered why we supported ISO images up to 2.2GB in size but not higher – the reason is that prior to Virtual Server Service Pack 1 we never actually officially supported the concept of ‘DVD ISO Images’. All ISO images that are under 2.2GB in size are really just very large CD ISO images.
In the mean time – if you are using Virtual Server RTM or Virtual PC you can work around this issue by using a virtual CD program on the host computer to mount the ISO and then map it to the virtual machine (I prefer Daemon Tools: http://www.daemon-tools.cc)