Hi cmwood, and welcome to the VMware Communities!
We've had a few reports that the Snow Leopard Server 10.6.3 disc triggers a problem with Fusion and direct physical disc access. If they are sending 10.6.3 media for this crazy $20 deal, I suspect we will see more of these issues being reported... 
You should be able to work around it by using Disk Utility on your host to make an image of the Mac OS X install disc, then attaching the disc image to the virtual machine and install from that. (When you use Disk Utility, make sure you select the optical disc drive as the image source, not the media named "Mac OS X Server". If you image the wrong thing, your VM won't boot past the Apple logo.)
Cheers,
--
Darius