Same problem - Mountain Lion won't run as guest in Parallels 7 on Lion
Parallels 7 August 3 2012
Macbook Air Late 2010, 4GB memory
Lion 10.7.4
- Created Lion guest using recovery partition and installed all software updates
- Opened App Store and downloaded Mountain Lion
- After overnight installation process, guest screen shows only the Apple logo on grey background
- prl_vm_app is taking 99% of cpu (out of possible 200%)
- restarting virtual machine leads to same result