With Parallels 16.5.0, single-stepping in windbg always crashes the Windows ARM64 VM. To repro, simply install a windows VM, and a Windows SDK. Then, use windbg to debug notepad.exe for example, and observe the crash with KMODE_EXCEPTION_NOT_HANDLED (1e).
I have the same problem, but with Visual Studio 2019 Preview remotely debugging an ARM64 C++ app running under Parallels 16.5 on apple silicon M1. Please look at this!
Same KMODE_EXCEPTION_NOT_HANDLED crash is present when single stepping WinDbg on Windows ARM64 under QEMU!!!! Windows ARM64 interprets the exception EXCEPTION_SINGLE_STEP (0x80000004) in a faulty way on Apple M1 silicon.