I have the same error. There's nothing in my hosts file and I can ping update.parallels.com
This has just recently started failing.
tracert shows this
	Code:
	
traceroute update.parallels.com
traceroute: Warning: update.parallels.com has multiple addresses; using 104.17.248.35
traceroute to update.parallels.com.cdn.cloudflare.net (104.17.248.35), 64 hops max, 52 byte packets
 1  netgear_d7000 (192.168.1.1)  1.204 ms  0.761 ms  0.929 ms
 2  253.core.plus.net (195.166.130.253)  7.866 ms  7.579 ms  6.957 ms
 3  84.93.253.107 (84.93.253.107)  7.898 ms
    84.93.253.111 (84.93.253.111)  8.602 ms
    84.93.253.107 (84.93.253.107)  8.509 ms
 4  core1-be1.southbank.ukcore.bt.net (195.99.125.130)  8.057 ms  7.979 ms  8.947 ms
 5  peer8-et-0-1-7.telehouse.ukcore.bt.net (194.72.16.146)  8.062 ms
    peer8-et0-1-5.telehouse.ukcore.bt.net (109.159.252.102)  8.159 ms
    peer7-et-4-0-5.telehouse.ukcore.bt.net (194.72.16.130)  8.338 ms
 6  109.159.253.95 (109.159.253.95)  87.334 ms
    195.99.126.233 (195.99.126.233)  20.311 ms
    109.159.253.95 (109.159.253.95)  74.584 ms
 7  104.17.248.35 (104.17.248.35)  8.165 ms  7.792 ms  8.516 ms
 And here's a dig.
	Code:
	
dig update.parallels.com
; <<>> DiG 9.10.6 <<>> update.parallels.com
;; global options: +cmd
;; Got answer:
;; ->>HEADER<<- opcode: QUERY, status: NOERROR, id: 58940
;; flags: qr rd ra; QUERY: 1, ANSWER: 3, AUTHORITY: 0, ADDITIONAL: 1
;; OPT PSEUDOSECTION:
; EDNS: version: 0, flags:; udp: 1232
;; QUESTION SECTION:
;update.parallels.com.        IN    A
;; ANSWER SECTION:
update.parallels.com.    562    IN    CNAME    update.parallels.com.cdn.cloudflare.net.
update.parallels.com.cdn.cloudflare.net. 262 IN    A 104.17.249.35
update.parallels.com.cdn.cloudflare.net. 262 IN    A 104.17.248.35
;; Query time: 20 msec
;; SERVER: 192.168.1.11#53(192.168.1.11)
;; WHEN: Sat May 29 20:15:48 BST 2021
;; MSG SIZE  rcvd: 134
 DNS is working perfectly.