Hey Matthew230,
The ISO is the correct way to go. Unfortunately, it will not install on the same box as your SEPM as this will be a standalone Linux appliance. The ISO installs the operating system as well as all the software. The installer will take you through a wizard asking questions about network configuration, hostname, etc. Once the install is completed, you'll set up the rest through the web interface on port 9000.
Regarding the clients, they will be downloaded from the server's web interface after you are done with the install. You can find them under "Consumers, Policy groups". There will be a download client button toward the bottom left.
Be sure to read the documentation, as it should answer any additional questions you have. Also, I'm linking you to a walkthrough of the server install. It's a little outdated, but the installation has not changed much since the walkthrough :
Symantec Encryption Management Server 3.4.0 Installation Guide - http://www.symantec.com/docs/DOC9323
Pictured Installation Guide for Symantec Encryption Management Server - http://www.symantec.com/docs/TECH197003
Cheers,
Phil