Just installed Windows ME on VM. Install went very well. When I tried to install a program from the (real) CD rom could not load the program because the the cd is not now being recognized. It appears the"name" of the CD rom has disappeared. Naming it D: does not work. I suspect the name must require a path??. Other than this glitch windows works extremely well. Boots in less than 15 seconds!!
Are you using Beta 2? In beta 2 it went from being able to type in the name to having an option called "Default CD/DVD-ROM". At least that's the behavior I saw.