thx for the response
the dmg is not corrupt because i can run it and get it past the first few steps of the installation outside of a vm
and it is mounting the disc see extract from log:
2013-03-08T16:03:36.900Z| vcpu-0| I120: CDROM: Connecting scsi1:0 to '/Applications/Install OS X Mountain Lion.app/Contents/SharedSupport/InstallESD.dmg'. img=1 raw=0 remote=0
if im not mistaken that means it can see the installer. plus int he cd/dvd setting it appears to be connected.
any other sugestions would be appreicated.