Hello

Make sure you are using a properly formatted image file. If you created the ISO then make sure it was created correctly.

In the console there should be a one time boot option. I think there is an option to boot from virtual media in that list. Make sure you are enabling virtual media in the console and then mapping the image file. If you continue having issues then I suggest providing details about the image and steps you are performing.

Also, if you are using the OS installation option within the LifeCycle Controller, it may not recognize all installation media. You may need to install directly from the media.

http://www.dell.com/idracmanuals/

Thanks

Tried it again, this time with a Server 2012 ISO, and it booted!  Tried again with the Server 2016 ISO, and it booted too - no idea what changed.

I'm having the same problem with an R640.  I'm using ISO images of Windows as supplied by Microsoft.  I've tried booting ISOs for Windows 7, 10 and Server 2016, and it does the same thing every time.  I select Boot from Virtual Optical Drive in the one-shot UEFI boot menu, then it says "Booting from Virtual Media", then it says "Press any key to boot from CD or DVD".  I press a key, and it says "Boot Failed: Virtual Optical drive" and "Please ensure a compatible bootable media is available".  Then I tried loading a Centos ISO instead, and it booted right up, so the process is working, but I find it hard to believe that all three of these Microsoft-supplied ISOs are "bad".  What in the world could be going in here?

This is a brand new server, with all the latest firmware and BIOS applied.

If this is a new system then you are not likely running the current BIOS. I show this note in the BIOS released last month.

Version: 2.1.6
Release Date
April 2019

Fixes
Microsoft Windows Installer and Windows Boot Loader may fail to start.

I am having the same issue with R740.  how do I update the bios when I can't even get windows server 2016 installed? Is there a way to update bios with a boot CD?

I have been using Dell servers for 15 years and I don't understand how a brand new server cannot boot from a factory OS disk?  What is going on at Dell's testing facility?

To update BIOS for R740 you can download File Format "Update Package for Microsoft® Windows® 64-Bit" from below link and use iDRAC to update it. 

https://www.dell.com/support/home/us/en/04/drivers/driversdetails?driverid=9p3c0&oscode=wst14&productcode=poweredge-r740

In iDRAC GUI you can can traverse to "Maintenance -> System Update" page and upload above firmware under "Manual Update" section.