After spending all day on chat with HP for the same issue, this is what worked:
1) Boot the server into Intelligent Provisioning using F10, with no other DVDs or USB drives attached.
2) Once IP has come up asking whether you'd like to run diagnostics or install your OS, open an ILO Remote Console and add your SLES ISO as a virtual drive -> Image File CD/DVD-ROM. Then go into the Install OS portion of the screen. The ISO file will present itself as a Disc.
IP uses AutoYast, so once the server is installed, you will have to go and install any add-on products or reconfigure your package selection after the server comes up on its own. Also be sure to check for the microcode update (TID 7016594).