Just got Fallout 3 and installed it. While the autorun launcher would give this error, the setup from the DVD worked. After that, I installed all the patches up to 1.7 and tried to run the game, only to get "please insert the correct dvd-rom select ok and restart application" error. Please note that all the executables on the disk were set to Compatibility mode and Run as admin as were the executables in the game's folder. Also, this is a Sandy Bridge build running on Win 7 64. Any help would be great but I really haven't seen any fix so far.
edit: Also tried the launcher on another Win7 32 machine and I get the same error.

Launcher starts normally on an old XP machine so it's not the disc.

Anyone? I sent a support ticket but never got a reply. Is there any solution besides installing Vista?

Yes. Rather than using the default FalloutLauncher.exe, you can start the game with just the Fallout.exe file. That one doesn't have any disc check routine on it, it will boot the game straight from the hard drive. Since you're on the PC though, you should get FOSE and use it's launcher. Since it also uses the main exe file and not the FalloutLauncher one, you can boot off the drive with it and it will add more functionality for many mods that that are available.

Yeah, the FalloutLauncher.exe doesn't work at all and I managed to install it using the Setup.exe from the DVD. Launching the game from Fallout.exe from its directory just tries to start the launcher for whatever reason. It won't even do a patch without trying to launch it and I get the same "Please insert the correct dvd-rom select ok and restart application" error.

Then get FOSE and use it's launcher to start the game, that should solve your problem. It will also allow you use the better mods that are available for the game.

I'll give it a try though, seeing as I can't patch the game past the version that comes on the disc.

In your first post you mention that you've already applied the 1.7 patch, so what's the problem? You don't need the disc to add the patch.