I recently setup Ubuntu Server 6.0.6 LTS under Parallels just because. But it would hang while uncompressing the kernel.
To fix that, follow the steps outlined here.
Mostly posting this in hopes google will pick it up and help other people find the solution.
How to Install the Ubuntu 686 Kernel
1.) boot to the Ubuntu 6.06 server install cd. Choose ‘Rescue a broken system.’
2.) when you get to the Rescue Operations screen choose “execute a shell in /dev/discs/disco/part1”, this option may read a little differently on your system.
3.) Click continue if another screen appears.
4.) At the prompt, type: sudo apt-get install linux-686
5.) You will be asked if you want to continue, type: y
6.) The installation of the 686 kernel will begin. It looks like an internet connection is required so the install files can be downloaded from the ubuntu website.
7.) When the installation is done, type: exit
8.) You should be returned to the Rescue Operations screen. Choose the last option: reboot the system. Make sure you’re not booting to the install cd!
9.) Give the system a few moments to boot-up. At last, you should be placed at the login: prompt.