let me understand better: you are using a DELL OS CD to make a Virtual machine or what? Did you try a physical to virtual conversion with VMWare converter?
Your CD key is probably an OEM which only works with the hardware it came installed on. If you move the OS to a virtual server, you need to purchase an Open OS license to activate it. Consider a Datacenter edition license which will give you unlimited Virtual server installations for a single virtual server host.