Some say it's probably due to the installer copying lots of things around, combined with slow IO on the VM plus the installer assuming reads are going to be slow (the source being slow CDs or floppies).

I call pish posh on that. What you're actually witnessing is The Microsoft Minute, as explained by http://ars.userfriendly.org/cartoons/?id=19990318

I'd guess lots of decompression & file creation. Windows install = lots of CAB files in a flat file structure.