Problems installing XP Home in Parallels 5160

I've been forced to use XP on my MacBook in order to run software for an MBA class...
I installed Parallels 3.0 today and the upgrade to 5160 seemed to install with no issues. Then I followed the steps in the Installation Assistant for Windows Express to install XP(SP2).
The installation runs through fine (seemingly) until it says Starting Windows. Then I get the BSOD and a message saying:
--------------------------------------------------------
A problem has been detected and windows has been shut down to prevent damage to your computer

SESSION3_INITIALIZATION_FAILED

If the is the first time you've seen this stop error screen, restart your computer. If this screen apprears again, follow these steps:

Check to make sure any new hardware or softwareis properly installed. If this is a new installation, ask your hardware or software manufactureer for any windows updates you might need.

If problems continue, disable or remove any newly installed hardware or software. Disable BIOS memore options such as caching or shadowing. If you need to use safe mode to remove or disable components, restart your computer, press F8 to select Advanced Startup Options, and then select safe mode.

Technical information:
*** STOP: 0x0000006F (0xC0000020, 0x00
--------------------------------------------------------

The BSOD only stays up for a second before the PD screen flips back to the Configuration. I had to take a screen shot to read what it was saying.

I have rebooted, unistalled/reinstalled PD, and tried Custom Install with no luck.
Please help...

 

Is your disc OEM, student, volume, or retail?

 

I bought XP Home Edition v2002 at Best Buy this afternoon...

 

What kind of RAM settings do you have in your configuration? Did you select to optimize for guest OS preformance?

Have you installed Fusion?

 

I left it at the 512MB setting for RAM even when I tried the Custom install.
I tried Optimizing for guest OS performance and checking let OS run faster with no change in outcome.

I have not installed Fusion.

Here's the stats on my machine:
Hardware Overview:
Model Name: Mac
Model Identifier: MacBook2,1
Processor Name: Intel Core 2 Duo
Processor Speed: 2 GHz
Number Of Processors: 1
Total Number Of Cores: 2
L2 Cache (per processor): 4 MB
Memory: 2 GB
Bus Speed: 667 MHz
Boot ROM Version: MB21.00A5.B00

 

Finally, it works

I guess I did a pretty lousy job of searching the forum last night, I found one today detailing the exact same problem and thankfully providing a solution. Creating a disk image and installing using the 'Typical' install worked great, here's the link:
http://kb.parallels.com/entry/30/458/

 

Glad you found the solution!