Windows 7 not recognized by Parallels 5

Have not found the following problem discussed earlier:

1. Running an IMac8,1 - Intel Core 2 Duo - 3.06 GHz - 4 GB Memory - Latest update to Snow Leopard
2. Was running Parallels 4 on Windows XP Home: no problems
3. Got Windows 7 Home Premium upgrade, installed in the Windows XP environment directly (which may have been an error on my part), as explained in Microsoft's article. Also copied all files onto a flash drive, as a precaution. The Window 7 upgrade installed properly, with the key activation accepted. Windows 7 desktop appeared properly, allowing sound and internet access. I called it "MyName-Windows7". Nothing else was added to Windows 7. Obviously Windows XP was uninstalled, as I preferred.
4. Next, I tried to install Parallels 5.0 Upgrade, twice. It seemed to install properly, with requested activation key. I called the operating system "Windows 7". When I tried to start Parallels from the "Windows 7" icon or choice of operating systems, it requested an operating system, so I reinstalled the Windows 7 disk, typed the proper activation key, then after "setup is starting" I got the following error message: "The unattended answer file contains an invalid product key. Either remove the invalid key or provide a valid product key in the unattended answer file to proceed with Windows installation". I was unable to find an unattended answer file, using Finder, where I could remove whatever key was deemed invalid. Every time I click "OK" it tries to start Windows again automatically. Now it seems that as it starts again, I noticed that it does not recognize the DVD in its drive.
5. Clicked on the XP choice of operating systems, and found the earlier Windows 7, but this time it was frozen with no sound and no internet access. Tried to uninstall it following Microsoft's article, but was unable to follow their directions completely. By the way, when I opened the Window 7 disk on the desktop, I found two Parallels files: "autorun.inf" and "setup.exe", which I presume were installed earlier?
6. So, given all the above, what's my next step?

RonnyB

 

Managed to get one virtual machine working

Discarded all virtual machines except the original one which had accepted the keys from both Parallels 5 and Windows 7. Now the remaining VM comes up OK, but does not detect the network adapter. Therefore, I cannot install new drivers for it (tried but they won't install), I don't have internet access and my audio doesn't work. I'm celebrating my temporary victory and will post separately on the adapter.

 

Solved network adapter problem

By installing Parallels Tools I managed to get the network adapter to be recognized. Now I have internet connection, sound and the printers work. Working in Coherence mode is awesome - glad I got both Windows 7 and Parallels 5!