I have CONFIG_ISO9660=y in my running kernel, in case that matters.
Also... I have *NO* problems at all installing *any* software from my SuSE 8.0 CDs using yast2. The problem is when I use Yast2 to try to start the update procedure with the 8.2 disks.
BTW - I legally bought both the 8.0 and 8.2 releases and have the "official" SuSE disks. So its not like a problem with me burning my own disks or something.