You can have up to four IDE devices. One is usually the CDROM. The other three can be virtual disks of any size you like. Does that help any?
Apparently I should've been more clear- In VMWare (Workstation, GSX, ESX) when creating a virtual disk image you can either keep the image contained within ONE SINGLE FILE or split that image, as it expands, into 2GB pieces (it makes management easier in many cases and is also convenient when stored on filesystems such as FAT32 that have a 4GB max file size limit).
Parallels does not currently support that feature, so currently, no. If you want to use FAT32, the latest beta purports (I haven't tried it) to access disk partitions directly, so if your VM doesn't need any individual data files larger than 4 gig you can use a HD partition directly. Other than that, maybe the wish list is the place to ask.
