Problem with installation of Windows XP

I'm having this same exact issue installing XP from SP2 CD (full CD, not upgrade). When it gets to the "Windows Setup" message it displays a txt error (blue screen) for a moment and then the VM stops, exact;y as described above. This is a brand new machine without a bunch of software instaled, just virgin OS X 10.5.3 with latest updates.

 

In the hopes that it helps someone else, the solution for me was to make a copty of the Microsoft CD, saved to an ISO file and have Parallels install from that instead of the official Microsoft XP CD. Details: http://forum.parallels.com/showpost.php?p=107463&postcount=6