If it's like with Fedora you have to install as root, which was new to me. Online docs state it has to be as super user (su command) but on a Mac apparently the password for root is already set to something. Here is how I got it to work, may not work for your setup but worth a try.
Open a terminal in the emulation. Since the su password is something other than the only password on my Mac the workaround was to use the sudo command to log in as the super user. Here is step by step how I did it.
In terminal type
sudo su <enter>
This prompts for your regular administrator password, type your password and hit <enter>. Now you are logged on as root using sudo to authorize su.
Now in the Parallels menu select Install Parallel Tools (or Update Parallel Tools). This mounts the iso file (looks like a CD) and on my system brought it to the front and opened the "CD". Now drag the image on the right of the Parallel Tools CD called "Install" to the Terminal to save typing and avoid misspellings in the path (you can also type the path and name if you prefer).
Terminal should now have the path to the Install file (in quotes perhaps) already typed for you. Click on the Terminal to ensure it's active and hit <return>. This should now start the install and prompt you as you install, remove or upgrade Parallel Tools. I have installed and now upgraded this way and it's worked for me, hope it works for you.
Last edited: Sep 15, 2011