This is apparently a known issue and I seem to remember I saw this issue a long time ago. I was installing VSTS 2010 Beta 1 on a VPC (yes, VPC, not Hyper-V) and I mounted the VSTS image (.iso) file on the Virtual PC for it to appear as if the actual disc was inserted, then as you can see on the screenshot below, I got Error 1330 a couple of minutes ......