create MacOS VM from a .dmg disk image

[David MC]

I have an Xserve running MacOS 10.6

i want to update it to Mountain Lion but there ain't no way i'm going to do it live on the production machine.

So i made a .dmg disk image of the machine

and now i want to create a parallels VM around that disk image, attempt the update there, see what goes wrong etc.

How can i create a VM around this .dmg file ?

Is the ONLY way to do this to clone the drive to a real hardware drive?

 

[David MC]

sorry i wasn't clear. i WANT a VM out of this. the dmg is not the point. pretend i'm starting from a working, bootable hard drive. How do i go from that to a VM?