Found myself in a situation where I needed to get DOS installed in a VM for a legacy application. Found the post below on the Parrallels forum very usefull
I just install a brand new VM with MSDOS 6.22. Here is what I did:
1. Download MSDOS 6.22 installer, as an ISO file, from here: http://www.allbootdisks.com/download/iso.html
This is the trick, because trying to use floppy images was a nigthmare.
2. Create a new VM and configure it for MSDOS. In my case, I created a new VHD with 250 Mb and assigned 4 MB of RAM.
3. Configure the boot sequence to: CD, HD, Floppy
4. Connect the CD to the MSDOS 6.22 ISO image
5. Startup the VM. If Parallels ask you to connect an image file to the CD, do it again in that dialog
6. After the VM starts, you will end with an A: drive, wich is actually the CD with the MSDOS 6.22 ISO image
7. Execute FDISK and create a primary DOS partition with all the size of the disk, or do whatever partition scheme you want.
8. Restart the VM. At A: prompt execute FORMAT C: /S
9. Stop VM and change boot order to HD – CD – Floopy
10. Restart VM
11. Execute all these commands:
COPY A:\*.* .\MSDOS /v
12. Restart your VM and you are ready to go!!