Installed Parallels 8 but just won't install OS!!! :(

Parallels installed fine, now using the New Virtual Machine window i click Install windows from dvd or disc image, select the .iso image file in the next drop down window for the source selection which is on my mac desktop, then enter the product key etc and off it goes.

On the black install screen the hdd1,cd/dvd,floppy and network all say failed then it moves onto dhcp for a while and fails that too. I've tried direct from dvd drive which also fails, checked the boot order part of preferences and the 4 selections are all ticked.

Pulling my hair out here, please help!