Dragging and dropping an Android Package *.APK into an AVD (Android Virtual Device) throws a cryptic error:
The APK failed to install.
Error: Could not parse err
I was facing the same issue. The problem is, if the same application is already installed with the same version on the Emulator then it won't get update/install. it will throw the same error as you are getting it.
Try the following solutions to fix it.
Uninstall the old APK from Emulator and then drag & drop the new APK, it would install the application
Change the version number from Build.gradle file as suggested by @Chuy47, build the new APK and install it
Hope it helps.