I finally made it work.  The root of the issue seems to be the access to the 
optical drive not being reliable.  I have not figured that out and won't try.  
Disabling rmvolmgr had no effect.

A brief summary:

Windows: Migrate the system image using disk2vhd.  You *might* get it to read a 
DVD system image set, but it is more  likely to fail than succeed.  So far as I 
could tell, there was *no* way to get the Windows repair disk to use a system 
image on a USB drive.

Debian:  Use an ISO disk image.  Life is too short for sitting in a loop 
reading "No bootable medium" messages.  This seems to apply to other Linux 
distros as well.  It *did* work once, but mostly did not just as with the 
Windows system image recovery from a DVD set.

I don't recall having the "No bootable medium" problem when running VBox on Win 
7 Pro.  But after the ordeal I've been through I'm not very sure of what did or 
did not work other than things that did work often did not.

I'll post a more detailed description following repeating on a bare drive to 
test the process.

I still can't get Debian to allow a screen larger than 1024x768.  Windows had 
no problems seeing the full screen.  That's a task for later.

Reg

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