Fusion 7 on OS X 10 - can not boot from ISO to create new VM

I'm having trouble just getting off the ground here...

I have Fusion 7 installed on my MacBook Pro running 10.10.1.

I have a Linux (Ubuntu) iso image on my desktop.

I create a new virtual machine, and in Settings I point the CD/DVD setting to the ISO image, and

set the startup disk to CD/DVD.

When I power-on the VM, it is apparently doing a network PXE boot, spins for a minute in DHCP,

then fails with no boot image found. I then get the pop-up that tells me to make sure I have

the CD/DVD set to point to my iso image, check  my startup disk, and try again.

There really does not seem to be all that much to this, but I can not get it to go. I tried

downloaded 2 other iso images (FreeBSD and another Linux) - same same.

I'm sure I'm missing something stupid. Appreciate the pointers.

Thanks

Jim