As they say, it's always best to even check the simple things. However, in this case that was not it. I'm going to post this here, but it was on the Citrix forums. Basically what I found was that on Citrix XenApp servers when applying the Desktop Experience scripts, it seems that on vSphere it can create a situation where removable drives are denied access - including CDROM. (in this case, I had a situation where additional vHDDs were denied access as well until they were deleted and re-added).
Here is the Citrix forum post that solved the issue. In my particular case, it wasnt enough to just remove and re-add the CDROM, I had to uninstall the device within Windows and re-add.
http://forums.citrix.com/thread.jspa?messageID=1622980�
Hope others find it helpful when deploying XenApp on vSphere!