I had the same issue occur with windows 7 (32 bit) from a boot camp partition after letting Parallels update to 11.1.0-32202. After several hours on chat with tech support, they escalated my case after not resolving the issue. During the course of the chat they gave me the following link (http://download.parallels.com/desktop/v11/11.0.2/ParallelsDesktop-11.0.2-31348.dmg) to download version 11.0.2-31348. I got back up and running with the following steps:
1. Trash updated 11.1.0-32202 Parallels application in Mac OS X (requires admin password).
2. Download and install Parallels 11.0.2-31348 from the dmg linked above.
3. Start my Boot Camp VM in Parallels and let startup repair restore windows to a point before the Parallels update.
4. Restart VM and let Parallel Tools from version 11.0.2-31348 install.
5. Click "Skip this Version" when Parallels ask me to update.
I guess this will only work if you have a restore point to go back to. Luckily I did and it got me back up and running.
Thought I would pass it on.