Creating a virtual machine w an upgrade disk

I recently upgraded to Parallels 6. I tried to created a windows 7 virtual machine. At a certain point in the installation it said that the version of windows I was installing [windows 7 Home Premium upgrade] required a certified copy of windows to be installed on the computer. I have a Windows XP virtual machine installed. Why doesn't the setup recognize it? How can I get to recognize the XP installation?

Thanks!

Bowie Curry