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I have just set up WFW 3.11 (I won't go into why!) and I've got 1024x768 256 colours working perfectly, using the patched SVGA driver. But I have two problems:
Try using the Realtek 8029AS driver. I found a copy here
http://www.claunia.com/qemu/drivers/index.html
Also installed the Microsoft TCP/IP stack which works with DHCP in Parallels.
http://support.microsoft.com/kb/99891
This will allow you to access file shares on your Mac using SMB (if you have file sharing turned on in System Preferences) and makes it easier to get files onto the Virtual machine.
I attempted the Realtek drivers, but WFW boots into a blue screen saying I don't have a Realtek adapter, press any key to continue, and then it boots into WFW (with networking not working).
I finally got it to work using the default Realtek network drivers that came with Windows. I don't know exactly how, but I think I went into the Parallels hardware configuration and removed all the hardware, including network and sound, rebooted, and then readded it. That seems to have helped.