I recently began encountering the following error on my mac when trying to access my parallels virtual machine. I've verified that my firewall is off, and that no other firewalls are in place to block this service, as well as tried stoping and restarting the service through terminal commands. I've uninstalled, and reinstalled Parallels multiple times without making any progress. I've submitted a problem report with the ID 22827674 in hopes that someone could help me figure out how I can resolve this. Unable to connect to Parallels Service. Make sure that the prl_disp_service process is active and it is not blocked by Firewall. If the problem persists, contact the Parallels support team for assistance.
As far as I see you use Parallels Desktop 5.0. What is you Mac OS X version ? Did you update your Mac OS X recently?
I'm running 10.8.2 I upgraded from version 5.0 to 7.0 and it corrected the problem. I tried upgrading directly to 8.0, but it wouldn't let me. Thanks, Chris