Guest OSX on Sierra with Parallels 12

I'm running 10.12.6 Sierra on 2017 15" Macbook Pro. (Yes, I need the legacy software). I have Parallels 12 which up to now has been running MS, but I want to replace that with OSX 12 or 15. The hardware specs put Monterey as the highest OS this MacBook Pro can run. However, I can only install Sierra on the vm, either from the "Recovery" disk option or from a standalone installer. From Sierra I cannot upgrade at all. I've tried High Sierra, Catalina and Monterey, both through the app store and via standalone installers. I've tried each as a clean install and as part of an upgrade path. In every case, it looks like the install would be successful but on automatic restart the vm boots into recovery and asks if I want to install from Time Machine, etc., etc. At that point it freezes on what ever I try to (re)install and I have to remove the vm and start over.
At this point it would be logical to conclude that my guest cannot be higher (more recent) than my base OS, but that would sort of defeat the purpose, so I'm hoping there's something I'm missing.