I figured this has happened to at least one other person...
I follow the installation instructions, but when I'm adding the parsec option for the cog files, after the location of the program it won't let me put %1 like it says I'm supposed to.

What's up with this?

Are you sure you are at the right window (see attached image)? Of course, you probably don't have a German WinXP, but you should get there by hitting Extras -> Folder Options in your File Explorer, clicking the Filetype tab, then marking the COG extension and hitting the button "Advanced" or however it's called (the lower one of the two in the middle group).

Yeah, that's the window I'm at.

Hmm, maybe your user is no Computer-Administrator?

It says I'm getting the filename and location messed up. I'm the administrator, though.

And you do have the space after the filename?

Try putting quotation marks around the pathname if they aren't there already...

e.g.
"C:\Program Files\Lucasarts\editing\Parsec\parsec.exe" %1