I downloaded the new version of parallels, which got me past my first hurdle. Now, however, after the system goes through the Windows 2000 installation process, after downloading all the files, it comes to a screen that tells me either the hard drive is new or is incompatible. It asks me if I am sure I want to continue. I'm afraid it may do something to screw up the whole computer. Is that a typical question/error message during an install? Can an install in the parallels vm screw up the rest of my Mac system? Thanks in advance for any help you can offer.
No, you won't screw up your Mac. The Windows installation process "sees" only the virtual hard drive (which is just a regular file on your physical hard drive). The installer asks you whether you would like to format the virtual hard drive, which is necessary in order to install Windows on it - at least if the virtual hard drive isn't already formatted with the NTFS or FAT file system which isn't the case with a newly create virtual hard drive.