There is no specific reason why you couldn't create a VM wherever you like. I use sometimes USB-3 disks exclusively. My first guess is that you just don't have proper user permissions on your directories and thus the files on d-drive.
However, for a fluent and no-hassle approach, I suggest the following workflow, which allows to see what really happens (if in case you didn't use it).
In step one, create the virtual machine first:
- create a directory somewhere to hold your VMs and your particular new VM, like "d:\VMs\Cent08_trial"
- create with enough disk space, not pre-allocated, in slices not with a single file (a longer story as such, why). Since you don't preallocate, you don't actually need to have that space ... you can move your VM later to another disk or another computer with different OS, which does have the space, if needed (this isn't the only benefit, just mentioning for clarity what is possible)
- select the correct OS when creating
In step two, open up the virtual machine settings and add and correct:
- take off hardware that does not make sense to have automatically connected (like usb, bluetooth), 3D acceleration (you can later adjust them back)
- make sure that RAM allocation is something meaningfull (and within your host capabilities)
- make sure that processor (core, thread) count is within your host capabilities
In step 3, install the OS:
- select virtual CD/DVD and attach the correct ISO
- check that it will power ON in reboot
- reboot and follow the OS related messages to install
When following this, it becomes more obvious that the matter of "CentOS" has no relevance in Steps 1 and 2, regarding your error message. Selecting correct OS is still important for step 3.
EDIT: OK, there is one, not so obvious reason, which may or may not bring that error message in Windows: Your d-drive is FAT (or FAT-32 whatever), and your single virtual disk files are over 4 GB (which can easily happen with 80 GB definition with slices).
