Because the CD was directly derived from the floppy disk images. However, once the images are on the 520's drive in a single folder they will function as if they were one dirty-big floppy disk, or a compact disc.
You had the makings of a network install while there was still a bootable system on the PB. Now that there is not, you have not because your network access floppy cannot access a network without an ethernet connection. (Given a spare week, you could try a LocalTalk connection.) Your options have shrunk to an external SCSI drive to boot and copy from or install from, for which you will need a HDI-29M to CN-50M cable, or a host SCSI Mac and a DB-25M to HDI-30M cable. Failing that, you will need the 19 floppy disks to install System 7.5.3, because the option of taking out your 520's 2.5-in. HDD, and of preparing it in a desktop Mac has also severe physical problems of connection unless you have a very specific adapter.
Your problem is that you removed the means of self-booting from the 520. Ergo, you now have to boot it from an external volume of some kind and transfer the Installer to its hard drive, or connect the passive 520 to something else that will mount its drive in SCSI disk mode and allow the something else to be the source of a System, be that an install CD, install floppies or a copied pre-existing installation of a System.
Do you have an AAUI ethernet adapter? Do you have a LocalTalk (serial) cable? Seemingly you have neither external CD-ROM nor HDD. Without any of these you are in the same cleft stick as you would be in setting out to build a house with no tools other than nail-scissors and a swizzlestick. To be a Mac resurrector is to equip yourself with at least one external drive that can boot a variety of Macs, cables to suit, and enough of Apple's Reference Release Systems to cover your flock: (6.0. 8) , 7.1, 7.5.3 (free), 7.6, 8.1, 8.5, 9.0.4, 9.2.1, from each of which you can update only with a free download. A monetary outlay of some kind stares you in the face at the moment.
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