Trouble Installing Windows 7 with Parallels 6

Just got my MBA 13 today, total mac newbie. Installed parallels 6 but cant install windows 7 Home Prem.
Copied windows disc to an iso image file under documents.
Keep getting error: No boot device is available
Tried 32 and 64 bit versions on disc.
Same problem using external drive. ?corrupted windows disc? Should I try another version of Win7?
Tried also with bootcamp and 20GB partition, still no luck.
Any hints or tips?
Thanks

I would post in the Parallels forums.

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