That looks like it's trying to tell you that you can't write to a read-only device (sr is your virtual CR-ROM).
I suspect that you configured you VM incorrectly. You need to boot from the image, but have a 16Gb HD as (what Windows would call) a C: drive. It should initially be unformatted, since the installation will do that for you. (Note that that's an ISO 9660 image, not a VM image.)
A simpler way to "get your feet wet" with Fedora (or most other Linux distributions) is to download the Live CD image and boot from that, either in a VM or directly after burning it to a CD or DVD.