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I had the same problem in my Win XP virtual machine after upgrading from Parallels 3 to Parallels 4. The #3 step resolved my issue right away....
Yea, I loved this feature, but now, it doesn't work anymore... :-(
Unable to communicate with hypervisor - solved Wow, I had the exact same problem today after rebooting. I downloaded/installed this build on...
For guys like me who like clear recipes, not blahblah: With your Solaris VM booted in Parallels: - In the menu, choose Devices --> CD/DVD-ROM...