If the image you are working with is not bootable, or made correctly, then when you convert it,
it is not going to work.
If it is an image of say, a bootable fat32 volume, then it is not going to be bootable when converted
to cdr format, because the file systems (fat32 and joliet) are not compatible.
A bootable fat32 volume can be made into a bootable cd, but it is a intricate process, not just
a copy exercise.
Creating bootable (el-torito) cd's can be done in OS X, but it has to be done from the command line
(Terminal.app), not from the GUI Disk Utility.
http://macosx.com/forums/howto-faqs/287382-editing-bootable-pc-iso-image-using-o sx.html
http://wiki.onmac.net/index.php/HOWTO
http://www.syzdek.net/~syzdek/docs/man/.shtml/man1/hdiutil.1.html
http://en.wikipedia.org/wiki/ISO_9660
http://cdrecord.berlios.de/private/cdrecord.html
hdiutil supports generating El Torito-style bootable ISO9660
filesystems, which is commonly used for booting x86-based
hardware. The specification includes several emulation modes.
By default, an El Torito boot image emulates either a 1.2MB,
1.44MB, or 2.88MB floppy drive, depending on the size of the
image. Also available are "No Emulation" and "Hard Disk
Emulation" modes, which allow the boot image to either be
loaded directly into memory, or be virtualized as a parti-
tioned hard disk, respectively. The El Torito options should
not be used for data CDs.
Some of the above examples include examples using mkisofs from jorge schilling's
cdrtools. hdiutil in SL has most of the same functionality built in as mkisofs.
cdrtools can be compiled on OS X.
If all this gets too deep for you, there is always Parallels Desktop or VMware Fusion. 🙂
Good luck with your VM project.
Kj