To clarify, the VMs I'm creating are Red Hat Enterprise Linux 4 (32-bit). The guest OS is Cisco Call Manager.
I have just tried to do install Windows 7 by booting from an ISO in the same NFS datastore, and the newly created Windows VM had no problem seeing that ISO and booting from it. So, this is something to do with the type of VM - Red Hat Enterprise Linux 4.
Edit: Never mind. The same Linux VM could boot from the NFS datastore. So, this is something to do with the Linux ISOs I have. I will need to do more investigation now.