mkisofs - Floppy Image to Disk Image
Solution 1:
You don't want to create a bootable CD-rom from a bootable floppy, that'd involve some complexity around El Torito.
Just add a floppy controller!
Go into your VM's preferences, choose Storage, right-click on the storage tree and Add Floppy Controller. Then Add Floppy Device, pick the floppy image you generated (rename it to .raw
if needed).