Another problem I ran into is that Parallels v.3 network bridge mode stopped working. This is related to the fact that I did an upgrade and not a fresh install of the OS. Reinstalling parallels does not solve the problem. The following files need to me moved out of the way and a reboot done.
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/System/Library/Extensions/vmmain.kext
/System/Library/Extensions/hypervisor.kext
/System/Library/Extensions/helper.kext
/System/Library/Extensions/ConnectUSB.kext
/System/Library/Extensions/Pvsnet.kext
~/Library/Parallels/
/Library/Parallels/
~/Library/Preferences/com.parallels
After the reboot a fresh install of parallels fixed the problem. Interestingly Fusion did not have the same problems.