Hi. I have the same problem - no problem with Boot Camp, but the same image does not work with Parallels.
I sent a support email to the Parallels team towards the end of last week and am still awaiting a reply. The content of that email follows:
I have a VM using the Boot Camp image on my HDD. I can boot into Boot Camp with not problems at all. But when I boot using Parallels, the process hangs. On using Safe Boot, the process seems to stop at the NTOSKRNL module.
The image is Windows XP Pro, with MS-Office 2007. Yesterday, when in Boot Camp, I reactivated Office 2007. Prior to that I had no problems with Parallels - now I do
I was wondering whether it was the Office reactivation that cause the problem. I have also been considering whether I need to uninstall and reinstall Parallels.
The system details: MacBook Pro Core 2 Duo; 2Gb Memory; 120Gb HDD. Parallels 3 build 4128.
Interested to hear how things turn out ....