Well, it's working OK now.
I don't have a copy of the log handy, but the errors I was seeing originally were something like "failed to initialize invalid response 404 not found". (I did find some info on another thread here that this is because SSO is messed up and that I needed to reinstall it and repoint VCenter).
The last thing I did, before I left, was to do a final reboot on the system. I was going to check on it later, based on what I could find out from here.
However, when I checked later, the VCenter service was running, however I was unable to log in using the regular client.. The vxpd log file was showing errors "failure while trying to connect to the SSO admin server No connection could be made because the target actively refused it".
I was able to use the web client and log in using the admin@system-domain account and SSO looked OK. At that time, I restarted the VCenter service and now everything is working OK.
I'm definitely not going to attempt the "Update 1" install at this time. As for the original issue, the "insert disk 1", is it because I was trying to install from a DVD, when before I installed from the extracted files on the hard drive? Is there a fix for that, or do I just need to always do an install extracted disk files?