After paying 49.99 to upgrading parallels 2 to 3, my vm converted fine. Now when I click on an attachment in Entourage such and an excel file it attempted to start parallels and open an application under vm. Not sure how/why how many defaults were changed, or how to easily change them back. I tried changing the security option (integration) to high (less integration) but this had no effect.
Try to click on menu Applications->Reset Windows Applications or right click on running Windows application and choose SmartSelect (in latter case you will be able to tune association yourself).