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Not sure what other information to give, (except that my first impressions of Macs are that they are maybe not as cool as I was led to believe!)
Hope someone can help?
In the context of being new to Mac's, Fusion and trying to create a Virtual Machine for the first time on a MacBook Air no less then I understand you saying this however out of that context I'd have to disagree with you as Apple hardware much less OS X Leopard is far superior to anything Microsoft has to offer!
Frankly IMO it's a little absurd to think that one can just walk up to and start using something one has not used before or has little or no knowledge and or working experience of and expect to have things go like a hot knife goes through butter. It's just not practical! 
Anyway I'd suggest you create an ISO Image of the Vista DVD and install from the ISO and the following information should help you to do that.
Here is some more information that should be of some help...
If the Virtual Machine is not booting the CD/DVD or ISO Image then select the CD-ROM from the Boot Menu.
To engage the Boot Menu and select CD-ROM Drive...
At the bottom on the Virtual Machine Display just above the Status Bar after starting the Virtual Machine it states...
"Press F2 to enter SETUP, F12 for Network Boot, ESC for Boot Menu"
On the Status Bar it states...
"To direct input to this virtual machine, click inside the window."
Now the BIOS flashes by very quick so one has to work quickly however give it a try and if the Boot Menu can't be brought up then the Virtual Machine's .vmx configuration file will need to be edited to slow down the POST and or change the Boot Order.
Okay, click the big Play button on the Virtual Machine Display and then quickly mouse click into the Virtual Machine's Display and then press the Esc key to bring up the Boot Menu and select the CD-ROM Drive. If it boots the CD fine and if the Boot Menu doesn't show because it just goes to quick then try again or...
Look at the Boot Delay section in and the Virtual Machine Files section in on where the Virtual Machine's .vmx configuration file is and add the following lines to the file. TextEdit can be used to edit the .vmx file.
To give more time to engage the Boot Menu add the following...
bios.bootDelay = "3000"
To, one time, force the Virtual Machine into the BIOS to change the Boot Order in the BIOS so the CD-ROM is first add the following....
bios.forceSetupOnce = "TRUE"
Notes: By default in Fusion 1.x normal file based Fusion Virtual Machines are created in the "~/Documents/Virtual Machines" folder and depending on Host OS ver. and or Fusion ver. there may be a .localized after Virtual Machines although by default this extension is not visible in Finder.
~ Is your Home Folder.
Files that comprise the Virtual Machine are placed in a Folder (a.k.a. Bundle and or Package) with an extension of ".vmwarevm" which by default this extension is not visible in Finder.
Example: "~/Documents/Virtual Machines/Windows XP.vmwarevm" would in Finder just look like an icon named "Windows XP".
To view the Package Contents of the "Windows XP.vmwarevm" folder ctrl-click (or right-click) the "Windows XP" icon and select Show Package Contents.
To edit the .vmx configuration file ctrl-click (or right-click) on the "Windows XP.vmx" file and select Open With > Other... then in Choose Application choose TextEdit.
Note: If using Firefox do not copy and paste the parameters if using TextEdit unless you only copy the exact line and nothing else otherwise use an Editor like TextWrangler.
Also...
When using Disk Utility in order to have a bootable ISO Image you should select CD/DVD Master with no encryption in which case by default it will have a .cdr file extension and in version 1.1 of Fusion and later does not need to be changed to .iso although one can if one chooses to. A default .dmg image is compressed and is not bootable although an uncompressed .dmg will boot if changed to .iso and of course the source CD/DVD must be bootable in the first place.
To create an ISO Image using Disk Utility...
1. Insert the CD or DVD disc in your computer's optical drive.
2. Open Disk Utility (/Applications/Utilities/Disk Utility).
3. Select the CD or DVD disc in the list of disks and volumes.
4. Choose File > New > "Disk Image from (Name of Disc)."
5. Type a name for the disc image.
6. Choose "DVD/CD master" from the Image Format pop-up menu.
7. Choose "none" from the Encryption pop-up menu.
8. Click Save.
Also...
Have a look at: VMware Fusion menu bar > Help > VMware Fusion Help > Managing Virtual Machines > Configuring the CD/DVD Drive
>>Aside: Probably a side swipe at Apple wasn't the best plan just when I'm trying to get help
Thanks - that's really given me alot to go on. I'll let you know how I go. I'm going through the points - but had to print the thread off - every time I tried to open it up in a second window in safari so I could read it and write here, Safari figures it out and doesn't let me do that. (Not Apple... nice Apple... )
The ISO Image sounds a workable plan. I'll give that a try... although I don't know how to do that yet!
Some of the other things you say don't sound like they are as you expect... I the status bar I only really get a message saying vmware tools is is not yet installed... but the help says I can't install those until Windows is installed. I also don't get any "press F2" prompts... it goes straight to a Mac address number and then the PXE stuff. I can't get a command prompt at all - just repeating the pxe routine.
Also, of course, trying to click on the connect DVD/ CD drive comes up with a message saying no drive on host... which - being a mac air is true... hence the USB superdrive.
So I am guessing the other help is secondary to my inability to get my head around the basics!
I'll start looking up ISO images now... if that fails I guess I could use Bootcamp first? (I'm guessing that's not as good as a clean fusion install?)
Anyway - I appreciate the help so far - but I'm a bit away from fixing my problem at the moment.
Some of the other things you say don't sound like they are as you expect... I the status bar I only really get a message saying vmware tools is is not yet installed... but the help says I can't install those until Windows is installed. I also don't get any "press F2" prompts... it goes straight to a Mac address number and then the PXE stuff. I can't get a command prompt at all - just repeating the pxe routine.
Obviously the messages in the Status Bar will change depending on what state the Virtual Machine is in however below is a screenshot showing you the messages I stated in my first reply in this thread. BTW as a general rule if it isn't a fact I don't say it unless I otherwise qualify what it is I'm saying.
Thanks,
I can't recall seeing that image and I can't seem to "close" the virtual machine at all... just suspend it, so I never get a chance to restart it to see if I would get it again. However - the Disk Image seems to be copying nicely as I speak. I guess I'll start again with a new virtual machine. Jst then need to work out how to delete the old one... I'll assume I just delete the files in the relevant Virtual Machine directory. But I recall seeing someone ask that question in this forum a while back. So I can check there
You've been most helpful matey. Cheers.
I can't recall seeing that image and I can't seem to "close" the virtual machine at all... just suspend it, so I never get a chance to restart it to see if I would get it again.
With the Virtual Machine running click the Virtual Machine menu and then pressing the option key changes "Shutdown Guest" to "Power Off".
Note: This also has the same effect as pulling the plug from the wall on a real PC in that any unsaved Data will be lost.
Alos it also changes the "Supend Guest" and "Restart Guest" commands too.
I guess I'll start again with a new virtual machine. Jst then need to work out how to delete the old one... I'll assume I just delete the files in the relevant Virtual Machine directory.
Have a look at: VMware Fusion menu bar > Help > VMware Fusion Help > Running VMware Fusion and Virtual Machines > Deleting a Virtual Machine