Can't Install Gutsy Gibbon under Parallels

[horatiolust]

I'm trying to install a VM under Parallels 3 (latest build) on my MacBook Pro. It starts the boot process, but never gets past "Running local boot scripts (/etc/rc.local)"

This happens whether I tell Parallels to use using the physical CD sent to me by Canonical, a disk image or the actual Live CD I created from the downloaded image.

Any thoughts?