In the last two weeks I refreshed my vSphere and vSAN lab environment, which included upgrading to vSphere 7.0. I decided to do a fresh install of both vCenter and my ESXi hosts which went pretty smooth.
After upgrading I decided to also create a fresh Windows and Ubuntu desktop as part of my Horizon lab (upgraded to 7.12 in the meantime as this was the minimum release supported with vCenter 7.0).
Normally installing a clean Windows or Ubuntu desktop is not a problem (kind of next/next/finish) but this time I just didn’t manage to get the VM’s boot from .iso. I made sure the virtual DVD device was 
but still once the VM was booting it tried to boot from the network and the DVD device was showing as disconnected.
Since I had seen some problem already with replicating VMs with the latest virtual hardware (version 17) I initially retried the installation with a new VM with 6.7 compatibility (vHW 14) as this has been successful in the previous environment without any problems and with the .iso file located on the same NFS datastore. This also failed, so the problem was not related to the virtual hardware.
Then I checked the vmware.log file of the VM that failed to boot from .iso and I noticed the following :
2020-05-25T08:04:58.619Z| vcpu-0| I125: CDROM: Connecting sata0:0 to ‘/vmfs/volumes/b8b05642-89df68b7/ubuntu-18.04.3-desktop-amd64.iso’. type=2 remote=0
2020-05-25T08:04:58.620Z| vcpu-0| I125: FILE:open error on /vmfs/volumes/b8b05642-89df68b7/ubuntu-18.04.3-desktop-amd64.iso: Read-only file system
2020-05-25T08:04:58.620Z| vcpu-0| I125: AIOGNRC: Failed to open ‘/vmfs/volumes/b8b05642-89df68b7/ubuntu-18.04.3-desktop-amd64.iso’ : Read-only file system (1e0002) (0x21).
2020-05-25T08:04:58.620Z| vcpu-0| I125: CDROM-IMG: image open for ‘/vmfs/volumes/b8b05642-89df68b7/ubuntu-18.04.3-desktop-amd64.iso’ failed: Read-only file system (1e0002).
2020-05-25T08:04:58.620Z| vcpu-0| I125: CDROM-IMG: Failed to connect ‘/vmfs/volumes/b8b05642-89df68b7/ubuntu-18.04.3-desktop-amd64.iso’.
2020-05-25T08:04:58.620Z| vcpu-0| I125: CDROM: Failed to connect CDROM device ‘/vmfs/volumes/b8b05642-89df68b7/ubuntu-18.04.3-desktop-amd64.iso’.
2020-05-25T08:04:58.620Z| vcpu-0| I125: Msg_Post: Warning
2020-05-25T08:04:58.620Z| vcpu-0| I125: [msg.cdromImage.cantOpen] Cannot connect file “/vmfs/volumes/b8b05642-89df68b7/ubuntu-18.04.3-desktop-amd64.iso” as a CD-ROM image: Read-only file system
2020-05-25T08:04:58.620Z| vcpu-0| I125: [msg.device.startdisconnected] Virtual device ‘sata0:0’ will start disconnected.
The fileshare provided to ESXi as an NFS datastore was presented with Read Only permissions (and always had been), but seeing these messages in the log made me change the permission to Read/Write and voila …. I was able to succesfully boot the VM’s from the .iso file on the NFS datastore and continue my guest OS installation.
So apparently vSphere 7.0 requires R/W access for booting from an .iso file.