When I tried to install from CD's I was getting errors as well, but this wasn't a vmware solution. The md5 checked out as well. I would get a disc cashe failure when copying and if it didn't then I would get errors down the line. Copying the ISO's to the HD seems to be the only way that I get get through an install.
Sounds like a bad drive or burner, best to always burn important things at a lower speed and let the burning sofware verify it afterwards.
But using the ISO's directly from the harddrive is a lot faster anyway. I only burn the Kubuntu CD and still keep the ISO for the lmce installer. That literally saves me hours.