I have Mac Leopard running Parallels 3 running Windows XP, using wired ethernet to network, not wireless. It rocks, even with all my Adobe CS3 work on both platforms at once. Don’t let the following comments deter you from a similar configuration. It’s not difficult.
Two biggest tips:
- Make sure to follow the instructions when updating.
- Always backup first, especially now that you’re dealing with *2* OS’s!
Okay now for glimpse into my situation, stupidity included. If this helps anyone, cool.
Because I started toggling the network settings on the Parallels Mac side around the time of my update to Parallels v3 build 5608, sometimes Windows couldn’t get on the web. I switched between “en0″, “en1″, “host-only networking”, and “shared networking”. Eventually I took whatever brought the Internet back.

That kinda worked, but then my FTP started having trouble. I could connect to the FTP server, but when I tried to GET or PUT files, I got the “Illegal PORT command” error from the FTP client. This was the big mystery. “Illegal PORT command”?! Huh? I latched on to the “port” part and even tried dropping my firewalls. That surely did more harm than good.
Ultimately the correct settings (for me) were “bridged ethernet” “default adapter” (not “shared networking”). Now it ALL WORKS! Yay! (Your mileage may vary. See Parallels for details.)

Now it all works again and I promise not to touch anything until the next update.
Networking without a map is anything but simple, especially with all this virtual sharing bridging NAT stuff mixed in. I’d say Parallels does a great job of making it as easy as possible and their help pages are pretty thorough (although a forum might be cool).
Here’s a shot of where I set “bridged ethernet”.

If you have questions, don’t ask me.