I continue to be extremely impressed with the Parallels VM. However, I just spent an undue amount of time wrestling with Window's and Parallel's network configurations in order to achieve a relatively simple result. In the hope of sparing someone else out there some wrestling, here's the scoop:

Goal

Set up a Parallels VM with Windows XP so that it is isolated from the outside world but network addressable from my mac via a fixed address (192.168.2.100) and the name 'parallels.'

1. Set up your parallels VM
2. In your VM's Network Adapter configuration, choose 'Host-only Networking' for the emulation mode
3. Go to the DHCP tab of the Parallels application preferences. Set the DHCP scope to include the desired address. (I chose start of 192.168.2.1, end 192.168.2.254, subnet mask 255.255.255.0).
4. Start the VM
5. In Windows, turn off the firewall. (Control Panel | Windows Firewall)
6. In Windows, set the local connection to use a static IP. (Control Panel | Network Connections | Local Area Connection | Properties... | Internet Protocol | Properties... | Use the following IP Address: 192.168.2.100)
7. In OS X, open a Terminal. Type 'ping 192.168.2.100' and make sure you're getting a response.
8. In OS X, etc/hosts isn't recognized. In order to put a name on that IP, you have to...
9. Open Applications/Utilities/NetInfo Manager. Go to 'machines.' Create a duplicate of 'localhost'. Rename it to 'parallels'. Set 'ip_address' to 192.168.2.100. Save and quit NetInfo Manager.
10. Back in Terminal, make sure you can 'ping parallels'.
11. Fin!