Server 2016 installation on Dell r720

Your media is probably bad. I would suggest downloading and/or burning/creating the media again.

You might, just in case, try the chipset drivers to see if it really can't talk to the SATA controller for the DVD.

You could also install via USB (if you get the same message, it is definitely media).

You need to update the LCC to support 2016:
http://www.dell.com/support/home/us/en/4/Drivers/DriversDetails?driverId=XTPX4&fileId=3581736037&osCode=WST14&productCode=poweredge-r720&languageCode=en&categoryId=LC

Did you try USB? or just DVD?

No, that can be used, but it manually supplies the drivers. The iDRAC/LCC update actually updates the firmware and and loads newer drivers for deployment directly from LCC.

You could also use SMTD (Systems Management Tools and Documentation) instead of LCC.

Installing directly from OS media is usually the easiest when installing a newer OS, but in your case it sounds like you'll need an additional driver (chipset usually). Installing from USB would bypass the need for chipset controller drivers for the DVD drive.

From a Command Prompt:

diskpart

select disk 1  //run list disk to make sure your USB is actually disk 1
clean
create partition primary
active
format fs=fat32 quick
assign //make note of drive letter for xcopy below
exit  //exits diskpart

xcopy e:\*.* /s/e/f f:  //assuming mounted ISO is E: and newly-formatted USB is F:
exit //exits Command Prompt

// are just informational notes and are not part of the commands (in bold)
"Mount" ISO in Windows 8 and later by simply double-clicking the ISO file

I just had the same xperience. Turns out it was the USB drives I was using....i had a pack of 30GB drives from ecention and everyone would throw the drive error when booting to a Win10 install.

Tried a different brand USB and it works fine.

WEIRD!!!