Benny, read below before killing me.
AH=41h INT 13h is a function with which one can ask a BIOS if it supports LBA on a specific drive or not. The El Torito bootable CDs only function with LBA (EDD). A gzipped LBA test ISO is available for you to check your BIOS against it; I had not yet come across one which does not report it correctly.
Our new bootloader, instead of having separate copies for network boot, CD-ROMs, floppies and hard discs, asks the BIOS what type drive it is running on (both first and second stage). If we were to remove the check if LBA is supported on the boot drive from the first stage bootloader (the PBR, bootxx), it would no longer work on MFM HDDs, floppies, etc; besides, the second stage boot(8/i386) loader is still using it to distinguish CDs from hard discs.
Anyway: the Parallels BIOS fails the EDD installation check and, as such, does not conform to the El Torito standard. Our new bootloader just happens to expose that problem – try the ISO for yourself…
We hereby cease to support working around the brokenness in order to use one unified second stage boot(8) loader per platform for both local (HDD, CD) and network boot. Parallels should fix their BIOS.
As workaround you can make use of the functionality that MirOS ISOs can be dd(1)d to a hard disc and run from there. Just enter it as an additional hard disc drive instead of CD-ROM drive. Or use netboot (load b_i386.ldr and the bsd.rd kernel).
Update 31.01: tg@ has hacked a workaround – reporting this bug to Parallels is still recommended though.