The "Bootable" legacy ISO you've used is in fact not bootable, it relies on CDROM emulation provided by BIOS. VMs don't usually do this sort of emulation. If you set the guest OS to something like ...

The virtual machine may fail to boot from an ISO because the boot order prioritizes the virtual hard disk over the optical drive, resulting in a “No bootable medium ...

I'd prefer not to have an ISO image 55GB in size, I'd like it to be of just what i have installed which right now is about 900 MB. I tried to 'dd' it but it created a 55GB image (size of the hard ...