Some components require that network connections be temporarily suspended during setup.
If you try installing from a network drive, which includes third-party apps that mount ISO images to virtual CD or DVD drives, you might experience what appears to be a non-fatal timeout message while Setup is copying its initial set of files. Even if not, you'll undoubtedly see this message during the installation of .NET Fx 3.5:
and end up with this screen when installation fails:
This means that your double-layer DVD burner must be local to the machine on which you want to install Beta 1. Virtual machines connect to the host OS's physical drives as networked drives, so you're out of luck if you want to install Orcas Beta 1 on Vista as a guest OS.
Use Daemon Tools' free Virtual Daemon Manager (VDM) to mount the en_visual_studio_orcas_beta_1_professional_dvd_23591.iso image file to a virtual DVD drive. The current VDM version (4.09) works fine under Windows Vista as a host or guest OS, despite what you might have heard on the Web.
Note: When you install VDM on virtualized Vista, save and run the setup file. You must reboot to finish VDM's installation. Under Virtual Server 2005 R2 RC1 with Vista as the guest OS, you must explicitly run daemon4091-x86.exe a second time to complete the installation after rebooting.
Update: 4/24/2007: Commenters have suggested using WinRAR or IsoBuster to extract the image to executable files. WinRAR isn't free (it has a 40-day trial license) and IsoBuster requires the PRO version ($29.95 personal, $49.95 professional) to open an image of this size. Some commenters have suggested other virtual DVD drive apps, but VDM is free and has proven itself under Vista.