Step 1: Installing Parallels Workstation
Let's begin our journey into virtualization goodness with getting Parallels Workstation installed. This is the software that allows you to install and run other OSs inside of Mac OS X. It is merely a tool and it is surprisingly small in size - it's only 8.6 MB. If you don't have your own copy and trial key yet, mosey on over to Parallels' site (yes, mosey), download a demo and sign up for a free trial key.
Installing the Workstation software itself is actually pretty simple; it's just like installing any other Mac OS X software. Once you're done, start up the Parallels software from your Applications folder, and you'll be greeted with a screen like this:
Now you're ready to use Parallels to install and configure an operating system.
Step 2: Creating a Virtual Machine
In order to run an OS inside of another, we need to create what's called a 'virtual machine,' which is more or less a configuration file Parallels Workstation uses to allow any Guest OSs (such as Windows and Ubuntu) to run inside the Host OS (in our case: Mac OS X) and use various system components like USB ports and ethernet/Airport access. If you decide to install more than one Guest OS, you will need to create a VM (virtual machine) for each one.
If Parallels Workstation is running and you get to the Untitled Virtual Machine screenshot I pictured before, go ahead and click on the "New VM" button at the bottom to begin the process of creating your virtual machine. As I understand it, the steps for setting up the VM and using it to install each OS are pretty similar, so I'm going to explain setting this all up with Windows and Ubuntu at the same time, but you should be able to play along using any supported OS.
You will be greeted with a wizard that will walk you through the VM setup process. Click next, and for our purposes and to help keep things simple, choose 'Create a typical VM (recommended)' at the next step. The following screen asks you which OS you plan on installing in this particular VM. If you chose Windows for the Guest OS Type, make sure to specify which version in the second 'Guest OS Version' pull-down menu. This applies to any other type/version of OS you're using, but in the case of Ubuntu, you'll need to chose 'Linux' under the type menu, and Other Linux under the version menu.
The next step of the wizard will ask you to name this VM and specify a directory to keep it in. You probably don't have to adjust any of these settings, but once you chose Finish, Parallels Workstation will ask if you want to automatically create the the directory to store these VM files - hint: chose 'yes.'
Step 3: Getting ready to install your OS
You should now see the screenshot above which allows you to configure how Parallels Workstation will treat your Guest OS (in my case: Windows XP) and which components of your Mac it has access to. If you click on any of the linked options, such as Memory or Network Adapter, a configuration editor will open that allows you to adjust all of these settings:
Some of these settings might be slightly different, depending on your machine's configuration, what your working environment is like and whether you'll be installing your OS from an image file or a physical CD/DVD, so you might not even need to adjust any of these. With my MacBook Pro and wireless setup at home though, you can see in my screenshot that I had to change my Network Adapter to use my Airport connection to make sure I can get online with XP. If you (hopefully) have 1 GB of RAM or more, and if you're using a more hefty OS like Windows, I recommend giving your VM at least 512 MB of memory to work with. However, I've heard many versions of Linux are much leaner than Mac OS X and Windows, so your mileage may vary.
Two crucial options you'll probably need to configure in this editor to get your OS installed and running properly are CD/DVD-ROM and the Booting Options tab under Options at the very top. I'll give you two typical scenarios to help you wrap your head around how this works and how to configure these on your own if you have to. You might need to adjust these settings before you install your OS, and probably after you install it and run it for the first time too.
Our first scenario is installing Windows from a CD, since I figure this is probably the most popular OS and method people are going to use. You first will need to go to the Booting Options tab under the Options section. Make sure you chose the third and last option: "CD-ROM, Hard Disk, Floppy." This means that the first time you run this VM, just like starting up a real PC, Parallels Workstation will look first to the CD-ROM to find something to boot from, since we have the equivalent of a blank PC; no OS has been installed yet. Next, go to the CD/DVD-ROM 1 options section and make sure the 'Enabled' and 'Connect at startup' boxes are checked. Then be sure 'Use CD/DVD-ROM' is checked. Just in case you're using a second external drive with your Intel Mac, I'd recommend sticking with using its internal drive for all this stuff. I have no idea if external drives are supported or what might be necessary - if even possible - to get them supported. Choose OK on the config editor screen to save your changes. If you're installing from a CD, you can skip ahead to Step 4 to begin installing your OS once you have these two options set. I'd recommend leaving the other options alone for now unless you know what you're doing.
The second installation scenario is installing from a disk image or .ISO file. This is especially handy if you've downloaded something like the Ubuntu Intel x86 image file - this way you don't have to burn a CD just to use it for this Parallels Workstation install. In this case, under the Booting Options tab choose 'Hard Disk, Floppy, CD-ROM,' and then under the CD/DVD-ROM 1 section choose 'Use image file' and point it at the image file you have saved. You shouldn't have to tweak any other settings for now, so let's start installing our OS. Choose OK on the config editor screen to save your changes.
Step 4: Installing your OS
Now here's where things get a little creepy: once you've configured everything properly in Step 3, click on the green play button at the top of the Workstation window to turn on your VM. Workstation will now change to display a familiar and generic PC bootup sequence, which might feel pretty trippy if you've never done this before. Yes, you are more or less booting up a PC inside of Mac OS X. If all goes well on this first boot, your VM will realize there is no Guest OS installed and attempt to check the boot devices in the order you specified at the end of Step 3. In my case, I had a Windows XP image file, so my VM began the install process as if I were doing this on a real PC. The rest of this step should be pretty simple, especially if you're already familiar with the installation process of the OS you're using. From what I've heard, and from my limited experience with installing Ubuntu, it seems like most OSs these days do a fairly decent job at walking you through their installation process. Windows XP installed just fine for me, but Ubuntu had some issues with my networking drivers, possibly because I specified using Airport instead of an ethernet adapter. I need to play around with that a bit more.
Step 5: Clean up, and some tips
Congratulations. If you're seeing another OS's desktop inside Parallels Workstation, like I have Windows XP pictured here, you've made it. And look in the bottom right there - Windows is almost immediately letting me know that my computer may be at risk because I don't have a virus scanner installed! Thanks, Microsoft.
But seriously, there are a couple more steps I'd like to recommend before you take off running into this bold new multi-OS world. First: after you're done poking around for the first time in whatever OS you decided to install, you can stop or suspend it by using that big red stop button in the Workstation window. It will ask if you'd like to suspend or simply shut it off, and suspending it works just like you might think: it puts your OS to sleep, preserving your open apps and work. Nice. But the first time you stop your VM, I'd recommend shutting it down because you need to edit your config options one more time to ensure smooth running.
Once you get out of your VM, click on the CD/DVD-ROM option to open the Configuration Editor again. Now that your OS is installed, make sure to chose 'Use CD/DVD-ROM,' and then go back up to the booting options tab and chose 'Hard Disk, Floppy, CD-ROM.' This way, from now on, your OS will boot up properly from the virtual machine you've created on your hard drive instead of looking for a CD/DVD to boot from.
Now for some tips. With the most recent beta 5 of Parallels Workstation, various resolutions are now supported in both windowed and full screen view. Yep, you can run your VM full screen. See that icon in the VM window with four cardinal arrows inside of it? While you're running your VM, press that to run your Guest OS in what I'd like to call the Trippy Full Screen™ view. As far as changing resolutions, I don't know how it works in other OSs, but in Windows you can right click on the desktop and chose properties, just like you'd do it on a PC.
Which reminds me: right clicking. Parallels should support *most* of the features and functions of whatever OS you're using, including using control to right-click in Windows. USB devices are now supported, though they'll have to be a format your OS can read. My HFS external hard drives, for example, can't be used in Windows, though I would imagine something like MacDrive could solve that problem. As far as easily moving between OSs when booted into a VM, you can hit ctrl - opt (alt) to change your mouse's focus back to Mac OS X. To make things run even smoother, when booted into Windows (and I think other OSs), go up to Parallels Workstation's VM menu and chose Install Parallels Tools. This will install some really handy features like the ability to mouse between OSs without having to type or click anything, as well as a shared clipboard; you can copy text in Mac OS X and paste it into Windows, and vice-versa. As far as moving files back and forth, this latest beta 5 has also made setting up a shared folder to use between your OSs really easy, though I haven't personally played around with this yet.
That about wraps it up for now; I think I've covered everything you should need to get started with Parallels Workstation and the OS(s) of your choice. Feel free to ask questions in the comments, and I will try to answer as many as I can to the best of my abilities.