Greetings, I'm having trouble installing lion guest on mac mini i7. VM is using 2GB RAM and 2 vCPU and rest of the settings are default. I was able to start installation using the recovery partition and download from apple server was successful but after that, the VM screen is stuck on mouse and keyboard pictures. See attached. Any idea why the VM is looping the images? I am using Razer mouse and dell keyboard. I am using trial edition of parallels desktop 7 for mac and love the mobile application side. BTW, My hardware works perfectly fine on Fusion 4. Installation was a breeze: drag and drop. BAM. Lion guest is running. I was also able to install Lion via disk image and not have to download from apple server which took like 3 hours! (Just trying to get attention from Parallels staff as well. I sent them an email support but haven't gotten a response yet.)
I am having the same issue (although I am using an Apple USB keyboard with a Logitech mouse). Lance, did you happen to find a solution for this?
Go to Parallels Desktop dropdown menu -> Virtual machine -> Configure -> Hardware -> Boot order and enter the following boot flags: devices.usb.enable_mouse=2;devices.usb.enable_keyboard=2
I discovered by chance, and it is the simplest thing possible. To proceed from the keyboard/mouse detection, just focus input to the vm and press ESC. Worked for me.
http://images.apple.com/legal/sla/docs/macosx107.pdf Section 2A and 2B (iii). So if you bought Lion in the Mac App Store you can use 2 virtual instances.
