I usually have a number of different versions of SQL Server around, installed on Virtual PCs. Usually works fine. So I was a bit surprised when installing the RTM version of SQL Server 2008 R2 from the downloaded .iso file to receive error message 2337 in the middle of the install. Thinking it was something wrong with my download (IIRC 2337 is a some kind of IO error during install), I re-downloaded the .iso. Same error. I then tried installing SP2 on my virtual Windows Server 2008 OS, then installing SQL Server again. No luck. Moved the .iso from the portable Passport drive to the C: drive on the host OS. Nope. Since this error occured during install of SQL Server database itself, there was no possibility of "guess I'll do without that component". Hmmm….
Finally I explored the possibility that this might be a problem with VPC2007SP1 .iso reader, the one that allows you to mount an ISO file as a virtual DVD. That's what I always use when dealing with ISOs on a VPC, (usually) works great. To eliminate this as a variable, I burned a physical DVD from the ISO, and mounted it on a remote computer, connecting to it as a network share. I could have tried physical DVD on the host, but was too lazy to swap the ATA disk for the DVD (it was my laptop). This worked fine, no IO error, everything installed great.
Since then I've also installed SQL Server successfully on a physical 64-bit laptop (no virtualization, but 64-bit version of SQL Server vs 32-bit on VPC, likely different installed files) from the exact same ISO, on my Passport drive, mounted using a free program, Virtual Clone Drive. No problem. But… I've heard of the exact same error from others on install to Windows Virtual PC (ie the one that you use with Windows7 host).
There's too many combinations to test them all out, but should you receive install error 2337 when installing SQL Server 2008 R2 on a VPC, you can likely benefit by the workaround. Of course, the nice thing about installing (especially betas, but even released software like this) is if you have a problem during install, you just delete the install-failed copy of the VPC image and try again.