You need to tell Wubi where the file is. Run
wubi.exe as follows from the command line (e.g. if you placed the image in a folder called
Don't extract the contents before running.
PS I found it tripped over paths with spaces in them; if you find the same problem then move it to a folder as shown above.
You can only install Ubuntu (32bit or 64bit) using the diskimage as shown above. If you want to install Kubuntu, Lubuntu, Edubuntu or Mythbuntu (or Xubuntu only on releases prior to 12.10) then you need to download the Desktop CD ISO and save it in the same folder as
wubi.exe before running Wubi. Make sure that the ISO matches the release of
wubi.exe and the flavour you are installing.
Note that Wubi will check the ISO MD5 sum to ensure integrity (if you run it when connected to the internet). It will still use the downloaded ISO if it's valid. However, if you disconnect from the internet it only checks the kernel and initrd md5sums so you should always check the ISO yourself.