For a research project I tried to install Windows NT 4 Terminal Server on VMWare Workstation (version 8).

The setup would always fail however with the following error:

Setup was unable to verify drive C:\ | Your computer may lack sufficient memory to carry out the verification, or your Windows Terminal Server CD-ROM may contain some corrupt files. | Press ENTER to continue

Obviously the installation doesn’t really fail because of too little memory and neither is the installation disc (an iso file) corrupt, it’s a bug.

Fortunately this particular bug was fixed in SP3 (build number 4.00.1381.32772). So make sure you integrate SP3 or higher in your install media and the it installs perfectly:

This portion of Setup had completed successfully