Eventually I got my WNT installation to boot, by making it first in the boot order. That's how I discovered that despite not saying "UPGRADE" on it, it was an upgrade disk. So I bought a Windows 98 full installation disk on Amazon. I planned to install it, and then to upgrade. It is not at all obvious to me whether to tell Parallels that this is a Windows 98 VM or a Windows XP VM. I have to check to see that I don't have multiple VMs. At any rate, I haven't yet been able to boot the Windows 98 disk. Periodically it disappears from the iMac desktop, and onto the devices - but I haven't figured out how to boot it. I press the green arrow, and get a VM screen. The last attempt produced a loop - I would get the following message: There is o operating system installed in the virtual machine. Please do the following: 1. Click the Power off button to stop the virtual machine. 2. Insert the installation CD with your operating system in the CD-ROM of your computer. The CD is already installed, but I press the power off button. Sometimes I close down Parallels so I can eject the installation CD so I can insert it, sometimes I leave it in - the result is the same. What's my next step? All the settings are what the instruction book says - (I've tried both Windows 98 and Windows XP settings).
IIRC, Windows 95 and 98 disks aren't bootable. you have to start from a floppy. There are floppy images of DOS and FREEDOS available (google is your friend). Download one, rename the image to .fdd, attach it to your virtual floppy, and it should boot DOS whence you can run the 98 installer from the CD.
A drive isn't an image. You need a floppy image on your OSX hard disk, connected to the virtual floppy in the VM.
It MAY be that using the physical FDD with a floppy in it would work but it's actually a lot more challenging than using the image. Take the time, read the manual about creating images, create and image of the floppy disk (using your wife FDD and the original floppy disk). It will work much better for you and it will preserve your floppy disk in case, in the future, you need to make another image.
I didn't seem to be able to get it to boot from a USB floppy. So I opened the image tool, and found that it matched the documentation - except it did show a picture of a floppy. But it had a choice between creating an image of a hard disk (and giving such options as defragging it), or creating an image of a CD/DVD disk. I tried both of these options until I got stuck trying to tell it that I wanted an image of a floppy disk.
The image tool on the Mac doesn't support floppies. (This is a mistake, in my opinion, on the part of Parallels.) Anyway, as I wrote elsewhere, you don't need to install 98 to upgrade to XP. You simply need to show the XP installer that you have a valid 98 disk.
I may be dense, but does the mac os itself have the dd utility? You can use that to create the floppy image directly from the floppy itself. Type man dd for details.
I found out that I don't need the floppy to install my upgrade - Windows versions earlier than Vista will allow me to insert an old Windows installation disks when it is looking for Windows. I probably could have saved myself $60 by not buying a full version of Windows 98 on the web, as I had upgrade versions of it. Live and learn.
