Thanks for the quick response vmroyale.
Physical media (cd).
Gets through CD1 and half of CD2 before choking.
Have tried copying the cd's to the vm drive and installing from there, same issue.
Found a second copy of CD2, same issue.
CD's install fine on physical windows 7 machine (and windows 8 for that matter).
My 'problem' is that windows 8 does not play nice with matlab 2010 and an update to matlab 2012 will come in at 4500GBP.
Paul C