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This worked for me in both cases:
>>From MacWorld.com<<
Fix for Parallels "black-screen" bug
March 8, 2007
Several readers have sent in a procedure that fixes the black-screen bug in the recent new version of Parallels Desktop. The freeze occurs when installing Windows in a new virtual machine as you install Parallels Tools.
Jose Goncalves described the fix:
F8 on windows startup_>VGA mode_>install Parallels Tools_>reboot
Laszlo Kardos describes it with a bit more detail:
I too had this occur on several different Parallels installs. The solution:
Restart Parallels
Hold down the F8 key (FN-F8 on MacBooks) and boot Windows into Safe Mode
Install Parallels Tools
Reboot Windows
It should work fine.
Sunil Punjabi has a slight variation:
There is a quick fix that worked for me.
Restart the XP instance
During the "BIOS" click on the window to activate it.
Hold down the F8 key, this will bring up a Windows boot menu.
Boot to "VGA" Mode.
Ignore all the errors about screen size, etc.
Install Parallels tools.
Reboot XP
FIXED!
Readers Paul Happ Jaap van den Dries of the Netherlands also said that the procedure works.
Jim Adrig warned how not to get into the problem:
I had this problem after the Hardware Wizard asked me to install a new Video driver, and I selected a Parallels driver (I forget which one; there were two; but it does not matter); and I was hosed.
DO NOT continue the 'New Hardware' wizard! Cancel immediately and just install Parallels Tools the regular way! The wizard does not come up again.
I never did get the bad VM running again, but I did not need it; I had a backup and used this method when the Wizard appeared again.
>>From MacWorld.com<<
Fix for Parallels "black-screen" bug
March 8, 2007
Several readers have sent in a procedure that fixes the black-screen bug in the recent new version of Parallels Desktop. The freeze occurs when installing Windows in a new virtual machine as you install Parallels Tools.
Jose Goncalves described the fix:
F8 on windows startup_>VGA mode_>install Parallels Tools_>reboot
Laszlo Kardos describes it with a bit more detail:
I too had this occur on several different Parallels installs. The solution:
Restart Parallels
Hold down the F8 key (FN-F8 on MacBooks) and boot Windows into Safe Mode
Install Parallels Tools
Reboot Windows
It should work fine.
Sunil Punjabi has a slight variation:
There is a quick fix that worked for me.
Restart the XP instance
During the "BIOS" click on the window to activate it.
Hold down the F8 key, this will bring up a Windows boot menu.
Boot to "VGA" Mode.
Ignore all the errors about screen size, etc.
Install Parallels tools.
Reboot XP
FIXED!
Readers Paul Happ Jaap van den Dries of the Netherlands also said that the procedure works.
Jim Adrig warned how not to get into the problem:
I had this problem after the Hardware Wizard asked me to install a new Video driver, and I selected a Parallels driver (I forget which one; there were two; but it does not matter); and I was hosed.
DO NOT continue the 'New Hardware' wizard! Cancel immediately and just install Parallels Tools the regular way! The wizard does not come up again.
I never did get the bad VM running again, but I did not need it; I had a backup and used this method when the Wizard appeared again.