If your install media is correct with all files needed. Have you tried to create a vm without the os installed and then attaching the .iso image and completing the install of the os?
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Selecting "Connect ISO" on the CD icon let my company's ISO build start to work! I've been banging my head against a wall trying to get the image to be recognized. This needs to be some kind of alternative since it's DEFINITELY not discoverable in trying to get the new VM created.
Now I just have to get our IT people to make an ISO build looking for "Parallels Virtual Machine" so their scripts will actually work, but it's not a Parallels problem any more
Thanks
Darryl