Ok I solved it - but I honestly doen’t know if this is by design, or if there is a hidden error masking the correct solution:
I tried to install a VM using the x86_64_v2 distribution (as I have older hardware). This fails unconditionally, unless I perform the installation on physical hardware in a live setup. Kickstart/anaconda fails to mount the cdrom image, as the compare between uname arch and the embedded arch description within the iso differ. The returned arch from uname is ALWAYS x86_64 whereas the embedded arch is x86_64_v2.
If I change the iso to use the newest release (x86_64 - not _v2) then the kickstart process installs without any problems. I am still not sure how the older x86_64_v2 can be used - unless of course it is only to be used on older legacy hardware.