I found solution - disable integrated CD device. Seems that windows setup searches only from first device.
Hi. I am just installing Windows 2003 Std R2 Sp2 to PE 1850 over DRAC 4/i remote media feature. For some reason setup fails. I have connected virtual media to Windows server 2003 iso image, i can boot PE 1850 from this image and start Windows setup. text mode (ie on blue background) portion succeeds. I can create partitions and file copying starts and goes without errors. Now, if new server restarts,  GUI mode setup starts and stops with error - "Setup was unable access files needed to continue. This could be caused by an error on the CD Media or the CD is no longer present in the drive."   Pressing "Retry" bombs back and pressing "Cancel" shows next error message- "An error has been encountered that prevents Setup from continuing. Internal Setup data structures are corrupted (phase 0). Press OK to view the Setup log files."   Virtula media is still connected. Drac firmware is 1.61 (latest). It is possible at all? has somebody installed Windows server 2003 in this way? Andres P    
Windows 2003 setup fails over DRAC4/i