You have a lot of cores, and hyperthreading makes it appear to the system that you have twice as many. The reason you may not ever see activity on half your cores is because the system is not utilizing them. While the system may be multiprocessor aware, not necessarily will every application you run. Today's processors are very very fast, which means that most of your cores will sit idle most of the time unless you're doing something really really interesting.

If you want to see your cores being utilized, try this google search, which returns multicore aware Mandelbrot set generators. Another suggestion is to try downloading HandBrake and installing and setting it to transcoding some large wmv9 files with deblock and denoise, set to maximum for good measure, but don't expect nice transcodes with those settings; its just something for your cores to chew on so you can watch in Activity Monitor that you can set processes that will use all cores. If you're not satisfied, run multiple instances of these applications. What I used to do to see the cores utilized is launch a ridiculous number of Chess.app instances and set them all to playing against the computer. If you want to try this, have /Applications/Utilities/Activity Monitor.app open, and open /Applications/Utilities/Terminal.app and enter this line, hit return, hit the up arrow and repeat over and over until you think you have enough instances running to work your processors,:

 /Applications/Chess.app/Contents/MacOS/Chess &

Regarding Parallels, I searched the forums and the documentation. Interestingly, neither the User Guide, nor the Data Sheet, nor any list of features that I could find say anything about how many cores you can assign to each VM. I believe this may be to how things get created in parallel, and while there were issues with multicore in previous versions (if the number of forum posts regarding it are any indication), perhaps they decided to move forward with publishing documentation sans any mention of the abilities to utilize multiprocessor/multicore.

That being said, I found some other sources for you that answer your question

How many CPUs can be assigned to a Parallels Desktop VM?

definitively:

• according to a wikipedia page comparison between Fusion and Parallels:

Up to 8 processors per VM & Multi Core

• according to lowendmac

In comparison, Fusion 5 and the current version of Parallels support up to 8 CPUs and 8 GB of RAM.

• according to macworld

Both Windows and Linux guest operating systems can be installed via an easy installer, and Parallels supports up to eight virtual CPUs, and 64-bit versions of Windows and Mac OS X Server.

Please bear in mind this last citation is for Parallels 5, which should be good news, as subsequent versions of Perallels will only increase the features and hopefully the robustness of the application.

FWIW, while I have switched to Open Source software for virtualization, I was an early adopter of Parallels and found their support to be excellent. They took good care of me and answered all of the many questions and problems I encountered in timely fashion. That was some time ago (~2005/6 during beta, and the release of 3.0), and I have heard complaints since then, but that was not my personal experience with their forums or their phone support. So I have encouraged others to register and seek help and answers to technical questions there. I would recommend you do this to hear from the source exactly what you want to know regarding how Parallels handles multiprocessing/multicore.

can I assign all 8 cores to the VM and still use Mac OS X?

Yes, absolutely, OS X is very good at handling resources. It is possible you may not even notice much is happening. I have myself a rather anemic (by today's standards) core2duo, and with 15 instances of HandBrakeCLI running transcodes, and both my puny cores maxed out, I really couldn't notice anything from the desktop while I continued to surf and use other day to day applications. I did keep an eye on how much memory was being used, and I didn't even get close to maxing my 8GB of RAM, nor did I notice any swapping. But if you have a slow (4200 rpm) harddrive, I think you'll probably notice something.

Got it working. Microsoft currently publish free, official Windows virtual machines for things like Parallels and others, for exactly this sort of testing - currently distributed on http://modern.ie

• Go to the visualization page downloads section and choose 'Mac' then 'Parallels'.
• For me (on Lion, July 2013) the "IE9 – Win7" VM didn't work at all, but the "IE10 – Win7" worked first time. Download it and extract the pvm file using the terminal commands provided. It's a big download, about 3.5gbs.
• Run the newly extracted pvm file (after installing parallels) which should open in Parallels and boot up. If it asks if the VM was 'Moved' or 'Copied', chose "Copied".

A few tips for working with Windows through Parallels in this way:

• Downloads within IE go to the regular Mac download folder by default
• It seems to work first time with whatever input methods you have on the Mac. Copy and paste between applications "just works", and (unlike Virtualbox), if you usually use a non-standard input device like a graphics tablet, it works in the visualized Windows windows just as well as everywhere else
• ...that said, it still interprets the numpad default differently as by default numpad numbers are arrow keys until you hit the 'Clear' button (while your Windows VM is focused) then it acts just like when the NumLock key is on for PC keyboards, i.e. you get numbers.
• If you have trouble entering credentials for any web pages, it seems like it adds a domain of its own (e.g. "IE10win7") rather than using the default for your network. If you have trouble logging in, try adding your network domain with a Windows-style backslash (e.g. enter domain\username as your username instead of username)
• To switch so that instead of ae Windows window with desktop, start button, etc, it treats each Windows application like a Mac application with its own separate window and doc icon, switch to 'Coherence mode' (View > Enter coherence)
• In 'Coherence mode', where Windows apps are treated and docked just like Mac apps, if you need to get to the windows desktop view for any reason, use the red parallels icon in the tray at the top right and 'Exit coherence'.

And just in case anyone is in the exact same position as me, needing IE for testing and for doing stuff in Sharepoint, you can install Sharepoint Designer in the VM but it has to be the 32 bit version.