Unable to create Mac OS X virtual machine from installation DVD.
The error appears:
Go to Parallels Desktop > File > New...
Specify the installation DVD.
At the "Name and Location" part tick Customize setting before installation and click Continue.
Open your virtual machine's Configuration > Hardware Tab > Boot Order
Add the following boot flag into the Boot flags field:
Switch to CD/DVD and select a physical name of your drive (not "DEFAULT CD/DVD-ROM")
Close configuration windows and proceed with the installation: