After update to Mountain Lion your Virtual Machine does not recognize CD/DVD media and gives the error message:
Unable to connect to CD/DVD 1
CauseThe issue is caused by the fact that the CD/DVD device fails to be properly unmounted from the Mac side when trying to pass into the Virtual machine.
Workaround 11. Eject any CD or DVD media from the drive
2. Go to Virtual Machine menu > Configure... > Hardware > CD/DVD 1 and set it to Default CD/DVD
3. Insert your CD or DVD media to the drive
Workaround 21. Put your CD/DVD disk in Mac CD/DVD-rom.
2. Open Virtual Machine Configuration by clicking on Virtual Machine menu > Options > Sharing > Custom Folders... >
Click on + > find the mounted CD/DVD image in Finder and select it > click Choose > OK.
The CD/DVD media will be mounted to your Virtual Machine, you can access it from My Computer in Windows.