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I did the same exact thing... Only works on 10.6.6 for me. Note, I tried VMFusion as well.. Same problem!
Have you tried reinstalling your system completely and then installing Parallels to see if it works on a fresh system (on 10.6.7)?
"Unable to connect the USB device to your virtual machine. The device cannot be connected now. Please try again later." Mac Pro Late 2008...
I went to "check for updates" and installed what was shown and when it says "do you want to run the installer?" I hit yes and then nothing...