I'm also having this problem. My command is as simple as:
Get-VM -Name vmname | Get-CDDrive | Set-CDDrive -NoMedia
The command performs the correct action — setting the drive to be disconnected and using the "Client Device", but produces the reported error.
Set-CDDrive : 10/22/2014 4:48:53 PM Set-CDDrive The operation for the entity VirtualMachine-vm-723 failed with the following message: "Device 'ide1:0' already exists."
At line:1 char:35
+ Get-VM | Get-CDDrive | Set-CDDrive <<<
+ CategoryInfo : NotSpecified: (:) [Set-CDDrive], GenericVmConfigFault
+ FullyQualifiedErrorId :
Client20_TaskServiceImpl_CheckServerSideTaskUpdates_OperationFailed,VMware.VimAutomation.ViCore.Cmdlets.Commands.VirtualDevice.SetCDDrive
It only does this on hosts where the CD drive is on IDE1:0. Most of my VMs are set up with the CD drive being on IDE0:0, but I have a few where they are on IDE1:0, probably due to an initial, but corrected, config error (I'm guessing a hard drive that was initially misconfigured to be IDE or maybe an accidental second CD drive) that got replicated through a template.
Point being, try creating a VM with a CD drive on IDE1:0 and nothing on IDE0:0 (or any other IDE bus) and see if you can reproduce.