If you have multiple ISO's, you need to concatenate them into a single image. If your single image is 1.2GB, it must be put on a single disc - DVD. Whether or not your 860 will read a DVD depends on whether or not you have a CD drive or a DVD drive. DVD was not standard on the 860. Forgive me if you answered this in your original post, but why are you using ISM? ISM is deprecated and you should be using SMTD for OS installs.
I'm trying to install Windows 2003 on a used poweredge 860 I recently purchased. I'm new to this and am doing and learning at the same time. The unit came without HDD's and CD drive. I've installed all and set up RAID 1. I've altered setup to include the new drives and the system sees both the RAID controller and the CD Drive. I've altered the boot order to go to the CD ROM first.  The unit is not now connected to any network or external device. I've downloaded the Installation and Server Management, v.5.2.0 iso and after a bit of wrestling got it burned with a boot sector. I've tried to get the install going and am failing. The unit goes thru the initial start and loads the raid controller, then seems to go to the CD ROM and begins to boot. The screen info goes (with some edit of the longer lines for brevity). EMM 386 3.27 copyright Caldera Inc ...DPMS 1.44 copyright Caldera Inc ... Oak Technology Inc OTI-011 CDRom device driver Device Name MSCD 001 Number of Drives 1 Found USB Hosts Intel Corp 27C8 Universal Host Controller Intel Corp 27C9 Universal Host Controller Intel Corp 27CA Universal Host Controller Intel Corp 27CC Enhanced Host Controller USB Device Attached to Host 02 Port 01  At this point the load hangs. I can't find anything in the setup identifying an internal device that may not now be there. Any ideas of where to look for problem will be much appreciated.
Install OS Hang