To boot an already existing VM from a CD/DVD or ISO file, first make sure VM settings
are such that the CD is connected and available when the VM boots. Then you need to
change the VM BIOS so it boots off the CD. To get into the VM BIOS, you either have to
quickly (and repeatedly) click the VM window and hit F2 as it's booting, or modify the
VM's VMX file with a genuine text editor (Terminal/vi or Textwrangler, NOT TextEdit)
and add/change a line to read:
bios.forceSetupOnce = "TRUE"
When you're in the BIOS, find the screen that specifies boot order and put the CD first.
After saving and exiting, it should boot off the CD.
I assume you're already aware that full Vista installs are possible with upgrade DVDs.
Don't forget to change the BIOS boot order back when you're done.