That's your problem. That's the wrong ISO for use on an M1/M2 Mac. That's an Intel architecture ISO. 

Microsoft does not provide a direct download of an ISO for Windows 11 ARM. Use the procedure contained n the Companion Guide to obtain an ISO for Windows 11 ARM. 

Then delete your virtual machine and start over creating a new one using the procedures in the Guide.

I'll make it clearer in the next update to the Companion Guide that you can not use a Windows 11 ISO that you download from Microsoft. Until either Microsoft makes a Windows 11 ARM ISO available for download or VMware delivers a tool like Parallels does to build the ISO for you, then using the procedure in the Guide is the recommended method of obtaining Windows 11 that will install on M1/M2 Macs.