I have been having the same issue. I am unable to update Ventura or Sonoma VMs. I've tried upgrading from within system settings, downloading and running the full installer, installing from recovery, erasing the hard drive and installing from recovery, installing to a secondary hard drive and installing a fresh VM. Nothing works - it fails at "Failed to prepare the software update. Please try again." (except for trying to install a fresh VM...that one fails creating the disk image). I have tried changing my hypervisor (no luck), bumped up the RAM and CPU available to the VM (no luck).
Needless to say - "Please try again" didn't work either... 
Is anyone else seeing this and/or are there other things that can be suggested? I actually have Sonoma 14.1 (trying to update to 14.1.1) and Ventura 13.6 (trying to update to 13.6.1). Those were installed from earlier though - prior to upgrading parallels to 19.1.1 (which I'm currently running). My Monterey VM doesn't have any problems.
The console shows the following error when trying to install from either system settings or from the full installer - even when installing to a clean empty disk:
Full replacement is required as opposed to incremental patch
The odd thing is I get this error even when downloading and running the full installer.
I would really appreciate any suggestions as well.