Sorry you are close to giving up, can only think it is your media, invest in the retail DVD from the Apple store it will work first time, and if you want to use an iso, then ImgBurn will make a fully working iso from your "Retail" SL DVD. From the above media, both DVD and ISO, I have a fully working "Snow" running under Workstation 8, not so straight forward when it comes to Lion, but that is a different discussion.
Finally if you want to run "Snow" and not "Lion", then stick with Workstation 7 the latest version is 7.1.5, from one or two comments I have seen "Snow" runs better in W7. The latest is not always the best, LoL!
Thx a lot and appreceiate all your help : )
My experience is similar; W7 runs Snow much smoother. I was running Lion too in a separate VM till yesterday before i got the 10.7.2 update - now my installation is fubared though i should have take a snapshot.
Btw besides OS X i don't think VM8 runs Windows VM's faster or more smooth than the v7. Maybe a little better 3D support but not so different. As you say: "The latest is not always the best".