In order to be able to run a VM created for a newer version you need to convert it to the ESXi 3.5 host using e.g. the VMware vCenter Converter Standalone. Alternatively, you may try to create a new virtual machine on the 3.5 host and - instead of creating a new virtual disk - select to use an existing virtual disk.
As for the license warning. When you registered for the free vSphere Hypervisor 3.5 (for 32 bit hardware) you should have received a license key which you need to enter using the Virtual Infrastructure Client (Configuration -> Licensed features)
André