I am trying to use my Xbox One model 1708 controller inside a Windows 11 virtual machine on my M1 MacBook Pro. When I connect the controller through Bluetooth, it works in the Mac OS. In Windows it shows up in "Devices" as "Virtual Xbox Controller" but no button presses register. When connecting using a USB connection, I gave Parallels access to the controller and it doesn't work on the Mac OS (which I assume it shouldn't) but also doesn't function in Windows. It appears in "Devices and Printers" as "Controller."
Are you using Parallels 17 or 18? Parallels 17 had problems with Bluetooth controllers. They should work when used wired, though. Parallels 18 should automatically recognize your controller.
Im using Parallels 18. Both when trying to connect with Bluetooth and with a wired connection Parallels recognizes that the controller is there but does not function.