Can't install MacOS as a guest on M1 MacMini

Hi,

I'm running MacOS BigSur and I've been trying to install BigSur as a guest on my M1 MacMini, but I've been receiving the following error: "The specified image cannot be used because your Mac is equipped with the Apple M1 chip that doesn't support Intel-based operating systems." According to this document: Link ,using BigSur as a guest is not compatible with Parallels 17. Trying to install MacOS Monterey as a guest however gives me the same error. I also tried creating a VM without the OS in hopes I could attach the ISO after, but the CD/DVD option inside the hardware settings is missing. Additionally, and perhaps unrelated, I don't have an option to install MacOS from the recovery partition as the images in the documentation suggest. See screenshot: Link. I have tried reinstalling parallels and it's still missing. I do have a recovery partition as you can see here: Link. In case it's relevant, I've downloaded all OS versions via terminal.

System:
M1 MacMini
BigSur 11.6.1
Parallels 17 (Pro Edition)
Parallel tools are installed.

I've had a support ticket open since the Oct 31st and I called support this AM for the same but they were not able to help. They just sent the system requirements and suggested I upgrade my host to Monterey, which I don't yet want to do.

Any suggestions?

Thanks

Brad