Parallels Desktop 7 requires a full installation of Windows be it XP, Vista or 7 and it does this as a virtual machine. I tested Parallels Desktop 7 on my MacBook Pro with OSX 10.6.8 . I have not yet taken the plunge and upgraded to OSX Lion. Call me lazy or risk averse, I had not too long ago bought into the Mac universe and it is operating nicely so I didn’t want to mess around with an upgrade to Lion just yet. Just in case you are wondering, Parallels latest release is compatible with OSX Lion.
The package consists of: Getting Started Manual, Installation DVD w/Authentication Key, Reference Guide, Getting Started Guide and cool Parallels stickers. The installation process is straightforward. Watch the animated GIF of the installation dialog boxes that appeared throughout the process.
I chose to install Windows XP because I happened to have a retail licensed edition. OEM versions cannot transfer from one system to another. The retail edition licensing allows me to move it from one system to another whilst an OEM edition would be tied to the installed and authenticated system. Windows XP also guaranteed that my older applications wouldn’t have a compatibility issue with Windows Vista or 7. Remember I mentioned having some older software that I liked and didn't want to spend additional money to upgrade or purchase for use on the Mac.
The installation process was simple because like you would on a Windows desktop, it starts with the bootable Windows Operating System CD. The system boots normally as though it were Windows Setup. It brought a smile to my face to see a ‘window’ booting Windows.