Though not accessible during a virtual machine's creation phase, this setting offers a a potential remedy to those situations where a virtual machine cannot see the host system's CD/DVD drive. We actually had a problem with this when our VM could not see the bootable media in our Thinkpad's CD/DVD drive. Changing the setting did the trick.
For David Berlind's write-up on The Virtual PC 2007 User Interface, see his post
in ZDNet's TestBed blog.