I’ve been using XenClient since a couple of weeks and I wanted to use an  ISO file from local storage but the current methods described would work for me until I found a blogpost which stated that the filename had to be lower-case. Otherwise XenClient wouldn’t show the file as stated in the following post on the Citrix forums:

You can copy ISO images to the /storage/isos directory on XenClient and then after hitting CTRL-Q in the XenClient UI to reload you will be able to map one of the ISOs to a VM for installing the OS or software. It will be in the advanced view and show up on the Tools CD dropdown.

In the following example you can see how to copy a file to your local storage, this is not something officially supported but it works:

Install Base Ubuntu

Because I regularly do various testing with Linux I just keep an ISO file in my repository on the XenClient.

Note: SSH (daemon) is turned of by default, to enable it:

• Open a terminal Ctrl-t in the UIVM (Citrix Receiver for XenClient)
• enter: touch /config/ssh_enabled
• Reboot XenClient

Now copy the ubuntu-11.04-desktop-i386.iso file to your XenClient to the directory /storage/isos.
(I use Filezilla as a scp client)
After the copy is done press Ctrl+Q in order to reload the GUI, so it will re-read the ISO directory.

Create a new VM – use all default values. After the failed boot, go into VM details and edit the field Tools CD in order to attach the ubuntu iso image.

So after copying the file (Note: Lower-case only!) you can hit CTRL-Q and the ISO file will be in the drop down menu of the Hardware – Tools CD option in the XenClient GUI.