Update:
I decided to do this by reinstalling Snow Leopard Server into a new VM and upgrading Mac OS from within the VM.
First problem: my first VM was done by Parallels reading the SLS Install disk from the optical drive. This time, Parallels didn't recognise the inserted DVD even though the Mac did. (*After checking in Configure..., it turns out that the VM wasn't pointing to the optical drives, so that explains that.)
Solution: I duplicated the .pvm file of my SLS VM, renamed it and launched it. After a warning about which MAC address to use, this opened ok. I copied the El Capitan installer from external HD and upgraded the VM OS to 10.11. Parallels quirkily decided to ignore the name I gave the duplicated .pvm and called it "Snow Leopard Server (1)" - however, I worked out how to change this and now it's "El Capitan".
So, despite Parallels 10 APPARENTLY only supporting OS X up to Yosemite (10.10) I've managed to install El Capitan (10.11), and could probably upgrade it to Sierra if and when I choose.
Last edited: Jul 24, 2018