Okay parallels is not vmware workstation so you do not have direct disk access like in vmware.
Unless they updated it in the last few days. I did ask them nov/dec 2006 for direct disk access and some other stuff to be added.
Either way I have tried on both OSX parallels host , win , lin and trying to install sabayon as guest = not happy with booting from cd /dvd.
The searching for cd / dvd and not finding it error. But it does that with one of my old win xp pro sp2 cd's as well = no luck.
You can use KVM or XEN or virtual box as all of them works the last time I checked not 100% sure.
You are more than welcome to try it and if you get it right PLZ post here in the forums your fix for it.
I think it has something to do with the scsi emulation = all hd's = /dev/sd* since 2.6.19 about and this is blocking it or stopping the hardware detector or something greek like this from noticing the correct type of hardware interface = confuse = no load, you get the idea.
PS> the version of paralles for OSX claims you can now play games on it on a mac / osx as they added some directx thingy for this. Hope it comes to the linux version soon and or wine etc.