Problem Resolved
We've logged a ticket to Parallels and they've resolved the issue for us, below is the reason:
Application pool plesk(default)(2.0)(pool) was using wrong password for its identity and thus could not be started.
To set the password:
Go to Start > right click on 'Computer' > Manage.
In the Server Manager go to Configuration > Local Users and Groups > Users.
Find IWAM_plesk(default) user there, right click on it and choose 'Set Password'.
After setting new password in the Server Manager, go to Start > IIS 6.0 Manager.
Find plesk(default)(2.0)(pool), right click on it, go to Advanced Settings. Choose the Identity field and edit it.
Click set and specify IWAM_plesk(default) as 'User name' and password that you have set in Server Manager as 'Password'
Thanks.