I tried adding a comment here [https://community.oracle.com/tech/apps-infra/discussion/4481789] but it's gone now, so starting a new discussion.
I'm having a similar problem with the full ISO (OracleLinux-R8-U3-x86_64-dvd.iso).
Now that we've proved out conversion from CentOS to Oracle Linux, I'm working on converting our unattended offline kickstart installation. I burned the aforementioned ISO to a USB stick, dropped in our kickstart config, and tried to install. This failed on the installation sources, which in our ks.cfg is configured as follows:
repo --name=AppStream --baseurl=file:///run/install/repo/AppStream
The same paths exist on the OL stick. I next disabled cmdline and ran the graphical installer with the same configuration. In the Installation Source menu, "On the network" was the only available option and the above path was configured under "Additional repositories," but the installer continued to flag the installation source.
Then I thought I should just run the graphical installer without our configuration and grab the anaconda-ks.cfg to figure out what I need to change. So I burned the ISO again and tried to run the stock graphical installer. It still flags installation source, but if I don't have a network connection I see an "ISO file" option. Here I can select the USB stick, but installation source is still flagged. I see the option to "Choose an ISO" but I'm not sure what I would select here.
I noticed that media.repo has the Oracle Linux version listed as 8.2.0, so maybe that's a clue. Fixing it there does not correct the problem.
EDIT: Also in the stock graphical installer, as soon as I configure the installation destination, the "ISO file" option disappears from the installation source menu.