It seems that a lot of systems have issues accessing the physical CD/DVD drive for installing operating systems. I'd suggest you create an ISO image of the CD, upload it to a datastore and attach this ISO file to the virtual machine.
To do this follow these steps:
create an ISO image of the CD
login to the vSphere client and open the datastore (right click on a datastore --> browse datastore)
create a new folder, e.g. ISO-Repository
click the upload icon and upload the ISO image to this folder
start the VM and attach the ISO from the datastore (make sure the CD drive is set to "Connect at power on" in the VM's settings)
If you create the XP-VM using a BusLogic SCSI controller, you need to apply the drivers during installation (F6).
You can also select an IDE controller for the virtual disk. In this case you don't need additional drivers, however you cannot resize/grow the virtual disk when using IDE.
Hope this helps you solve the issue.
André