Does the VM HDD need to already be formatted?
Any ideas here? I was resesarching VirtualBox and they mentioned the following... was not sure if this might also hold true for Parallels?
"The Mac OS X Server installer expects the harddisk to be partitioned so when it does not offer a selection, you have to launch the Disk Utility from the "Tools" menu and partition the hard disk. Then close the Disk Utility and proceed with the installation."