All this having to create a new partition to install an iso is hogwash. Linux has loop mounting to handle it and it works as well in the installer as it does in full blown linux.

Use a bootloader or unetbootin to launch the install
Wait until it complains that it can't find the cd rom
Press alt F2 to bring up a BusyBox console.

mount your filesystem contain the iso (mine was sda3 since I've got an sata hd)

Then follow the instructions from:

http://forum.synology.com/enu/viewto...d+loop0#p28071

Namely

Create loopback device:
: mknod /dev/loop0 b 7 0

Mount the image in /mnt/iso:
: mount file.iso /cdrom -t iso9660 -o loop=/dev/loop0

Or as alternative to the command above:
: losetup /dev/loop0 file.iso
: mount /dev/loop0 /cdrom -t iso9660

This second one worked for me. I could then mount the loop device on /cdrom and the install proceeded as normal.

Hope this non-destructive install helps someone else too. It couldn't be simplier....