Existing users, 
This is always good advice, but in this case it seemed to be essential. My first attempt at installing this failed. Windows got into an infinite loop due to a crash during the boot cycle.
So I went to a backup I had with WinClone, restored it, launched BootCamp, got -everything- up to date, and then relaunched Parallels. This time the update worked as expected.
dave
Parallels Desktop
Run Windows simultaneously with OS X.
Version: 5.0
Backup BootCamp partitions before installing
Feedback Type: Troubleshooting Report
Contributed by: deemery Sunday, November 23 2008 @ 08:36 AM PST
Product Platform: MacOSX
Used Product For: Less than a month
System Info:
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