I'm running an OS X 10.10.5 host with Parallels 11.1.1 freshly bought and installed. When I attempt to create an OS X virtual machine, Parallels creates a bootable OSX .dmg soft disk. Several times when I tried, Parallels complained that the disk it created wasn't bootable. I deleted and re-downloaded /Applications/Install OS X El Capitan.app, and now Parallels no longer complains about the .dmg file it creates. However the VM can't boot from it. The bootloader doesn't recognize it as bootable. (I'm not 100% certain the re-download of Install OS X El Capitan.app coincided with the minor change in behavior.) I also tried running /Applications/Install OS X El Capitan.app/Contents/Resources/createinstallmedia directly several times, and it failed as well. Should i try using a USB stick instead of creating a .dmg file? (Oddly, I don't have one handy.) Should I create a partition on my disk and point createinstallmedia at that? Should I upgrade the host to 10.11.1 first? All of these strike me as unlikely to make a difference. Any other ideas?
It's working now. The problem was an operator malfunction. The VM boot order is set such that it attempted a network boot before booting from the installation disk - which to my surprise is set up as a hard disk, not a CD. When the VM declared the CD device unbootable and went into PXE boot, I gave up and quit.
Try installing the virtual machine of Yosemite, try upgrading it to to Elcapitan and then performing the same and let us know how it goes.
