First, stop and uninstall the existing image:
guest-os 1 stop
guest-os 1 image uninstall
The IOS command to install an IOx image is:
guest-os 1 image install flash:/ir800-ioxvm.1.2.4.2-T.bin verify
Note: verify must be specified for the image to be installed properly.
Check if it worked:
sh plat bundle-install
Your should see:
Installation: Cisco-GOS,version-1.2.4.2
reload
sh plat guest-os
You should see:
Installation: Cisco-GOS,version-1.2.4.2
After you have installed IOx you will need to re-enable SSH. See What Are The Possible Root Causes of IOx Not Running?, Section: Cannot SSH into IOx.