My Windows 7 disk won't install in Parallels

Installation of parallels went fine, but when it comes to where I install Windows 7 as part of the VM setup, parallels doesn't recognize that my disk is in the drive. It pops up a message that says:

"The CD/DVD disc is not yet ready. Make sure that the installation disc is inserted into your Mac's CD/DVD drive and this drive is not used by another virtual machine".

Please see attachment for actual screenshot.

I haven't had any problems with my CD drive and I just used it to install Snow Leopard earlier today.

I have an Intel Mac Pro running Snow Leopard 10.6.2. All software updates are current. My copy of Windows 7 is brand new (just purchased today) and I tried using both the 32-bit and the 64-bit disks. No luck with either.

Help would be greatly appreciated.

Thank you.