I realize this thread is over a year old, but I'm having the same problem and have been battling it for months!
Mounting the windows.iso disk doesn't work. Although the disk icon at the status bar at the bottom is turned on and is pointing to the windows.iso file the drive does not appear in the Windows Explorer. When I look at Control panel, it has the dreaded yellow exclamation point. 
Also, Windows requires that I authenticate before I can even start the VM.
Mac: MacbookPro, Leopard 10.5.6
VM: Windows XP Pro, SP2 converted from Dell Inspiron 1100
I'm a Mac novice, so please be specific on steps to resolve. Thank you!
SP
I realize this thread is over a year old, but I'm having the same problem and have been battling it for months!
So why have you waited so long to ask for help?
Mounting the windows.iso disk doesn't work. Although the disk icon at the status bar at the bottom is turned on and is pointing to the windows.iso file the drive does not appear in the Windows Explorer. When I look at Control panel, it has the dreaded yellow exclamation point.
If there is a flag on the CD/DVD in Windows Device Manage then you cannot install VMware Tools while using a flagged CD/DVD and this is not a Fusion issue per se and needs to be diagnosed/troubleshoot just as if it was a Windows physical machine. Have a look at the following Microsoft KB Article to see if it's applicable: Your CD drive or DVD drive is missing or is not recognized by Windows or other programs
Also, Windows requires that I authenticate before I can even start the VM.
Well if Windows isn't running then Windows can't be requiring that you authenticate anything before you even start the Virtual Machine! So it sounds like you're not explaining the issue correctly so you're going to have to be a bit more explicit and specific as to this "authenticate" issue. Screenshot if necessary however may message boxes the text can be copied and pasted so try that first.
VM: Windows XP Pro, SP2 converted from Dell Inspiron 1100
OEM versions of Windows that came pre-installed like on your Dell Inspiron 1100 are not legally transferable. In other words it lives and dies on the system it was originally installed on, the Dell Inspiron 1100 in this case.
I realize this thread is over a year old, but I'm having the same problem and have been battling it for months!
So why have you waited so long to ask for help?
I haven't waited. I have been trying to troubleshoot and often gave up because I have more important things to do than try and get this to work. I have two programs on the PC that I want to use that I cannot get Mac versions for, so I attempted it again. Starting from convert process again.
Mounting the windows.iso disk doesn't work. Although the disk icon at the status bar at the bottom is turned on and is pointing to the windows.iso file the drive does not appear in the Windows Explorer. When I look at Control panel, it has the dreaded yellow exclamation point.
If there is a flag on the CD/DVD in Windows Device Manage then you cannot install VMware Tools while using a flagged CD/DVD and this is not a Fusion issue per se and needs to be diagnosed/troubleshoot just as if it was a Windows physical machine. Have a look at the following Microsoft KB Article to see if it's applicable: Your CD drive or DVD drive is missing or is not recognized by Windows or other programs
The flag is on the virtual CD/DVD drive for the VMWare windows.iso file.
Also, Windows requires that I authenticate before I can even start the VM.
Well if Windows isn't running then Windows can't be requiring that you authenticate anything before you even start the Virtual Machine! So it sounds like you're not explaining the issue correctly so you're going to have to be a bit more explicit and specific as to this "authenticate" issue. Screenshot if necessary however may message boxes the text can be copied and pasted so try that first.
I realize that Windows needs to authenticate to run. I only made my comment because the Migrate Your Windows PC to your Mac video specifically says to not authenticate before installing VMWare tools.
Let me rephrase what I need help with - how do I get the windows.iso file to mount correctly in the windows VM? I can use the VM, but cannot get the VMware tools installed.
I realize this thread is over a year old, but I'm having the same problem and have been battling it for months!
So why have you waited so long to ask for help?
I haven't waited. I have been trying to troubleshoot and often gave up because I have more important things to do than try and get this to work. I have two programs on the PC that I want to use that I cannot get Mac versions for, so I attempted it again. Starting from convert process again.
The point I was trying to make was that when you said "I realize this thread is over a year old, but I'm having the same problem and have been battling it for months!" and since you only joined the on May 13, 2009 and it was your first post it was more like me saying why didn't you come here months ago and ask for help but don't worry about because as you said you had more important things to do.
Mounting the windows.iso disk doesn't work. Although the disk icon at the status bar at the bottom is turned on and is pointing to the windows.iso file the drive does not appear in the Windows Explorer. When I look at Control panel, it has the dreaded yellow exclamation point.
If there is a flag on the CD/DVD in Windows Device Manage then you cannot install VMware Tools while using a flagged CD/DVD and this is not a Fusion issue per se and needs to be diagnosed/troubleshoot just as if it was a Windows physical machine. Have a look at the following Microsoft KB Article to see if it's applicable: Your CD drive or DVD drive is missing or is not recognized by Windows or other programs
The flag is on the virtual CD/DVD drive for the VMWare windows.iso file.
If the flag is on the CD/DVD in Windows Device Manager did you even look at or try what was in the linked Microsoft KB Article?
Also, Windows requires that I authenticate before I can even start the VM.
Well if Windows isn't running then Windows can't be requiring that you authenticate anything before you even start the Virtual Machine! So it sounds like you're not explaining the issue correctly so you're going to have to be a bit more explicit and specific as to this "authenticate" issue. Screenshot if necessary however may message boxes the text can be copied and pasted so try that first.
I realize that Windows needs to authenticate to run. I only made my comment because the Migrate Your Windows PC to your Mac video specifically says to not authenticate before installing VMWare tools.
Nowhere in that video does it use the term "authenticate" and it specifically and explicitly states "If Windows prompts you to re-activate be sure to wait until after you install VMware Tools" so again you're not relaying accurate information however if you've converted a physical machine using an OEM version it is not legally transferable and in most cases you end up having to re-activate Windows first and possibly again afterwards if you are not being given a 3 day grace period in which to re-activate.
Let me rephrase what I need help with - how do I get the windows.iso file to mount correctly in the windows VM? I can use the VM, but cannot get the VMware tools installed.
I have already provided an answer to this and if you have tried you certainly didn't provide any feedback as to whether or not information in the linked Microsoft KB Article helped. You also have not provided adequate information as to the nature of the flag on the CD/DVD in Windows Device Manager to further analyze and diagnose so these is nothing else to add unless you provide additional information. From the limited information you've provided this appears to be a Windows issue not a Fusion issue so you need to diagnose/troubleshoot this just as if it were a physical machine.