We’ll between updates in parallels my Ubuntu 7.10 which was a upgrade from 7.04 quit working so I decided to start off fresh. After a few problems I believe I’ve come up with a doable combo. Personally this should just work and the Parallels guys need to get their act together with Linux support. Fortunately I’m a tolerant person and like the challenge of getting something working. Using the 7.10 i386 desktop ISO file I selected safe graphics mode. Another option may be a text based installer on the alternate cd, but so far safe graphics is working. One problem will be that the main screen will freeze. No big problem. Hit ctrl+alt+f1 and hit enter and you have a prompt.
type: startx
Eventually the desktop will pop up. Start the installer and it should finish after you answer all the questions.