This is because the information present at time of backup is serialized in manifest under VmConfig.metadata. Reference to the ISO image is also contained within the VM’s vmx file which is backed up along with the vmdk file(s) and compressed in.VAR file.
When Virtual Center tries to create the VM it is provided information from the VmConfig.metadata as well as the serialized vmx file (located within the .var file). If the volume name the ISO was attached to at backup cannot be located at the time of VM creation on restore the process will fail.
By temporarily renaming the volume you are restoring to this will allow the VM to be created. Once the VM is created the volume can be named back to its original name.
If your restoring back to a host that had the same shared LUN’s as the original vm backup location this is not an issue.
You can work around the issue by doing the following: