As others have said, this is a trip to Franconia and Bavaria, not Munich. I think this is better, though, than trying to squeeze all of Germany in a few days. It will give your parents more time to enjoy and it will be less hurried than other trips that might be suggested...

1. that there is Oktoberfest in Munich does not mean that there is Oktoberfest in other places. That's good - Munich is, in my opinion, not a very fun place to be during that time (too many drunk tourists...). But, yes, if they have not been there, I think 2 days Munich is a good idea.

2. Neuschwanstein: I've said it before, and I'll say it again: Neuschwanstein is completely overrated. If they want to see a typical castle or palace, this is *NOT* the place to visit. Rather, Neuschwanstein is the Disney land view of Germany. So, unless they need to tell their neighbors that they've been there, do not waste the time. Rather go to Salzburg instead (easy to reach round trip by train within a day from Munich).

3. Bamberg: They will need one day to see the city (I live there, most of my visitors need more than one and then usually come back. yes, it is very nice, and, no, I did not grow up here but moved to Bamberg without ever having been there before...).

4. Wuerzburg: The residence alone takes 2-3 hours. Your parents should be aware that some parts of the city were badly damaged during WWII, so while the city is still nice, apart from the residence area it is not as nice as downtown Bamberg. So I'd go to Wuerzburg first and Bamberg second (although it they want to only go to one of the two cities, go to Bamberg and not to Wuerzburg).

5. Rothenburg: very nice medieval town, however, also very touristy. Since they will have seen the old town of Prague and the like, they might want to skip this city. As others have said, Dresden is a very nice alternative and also culturally different to what they will have seen so far. One alternative would be to go to Dresden on Day 8, which would give them half a day in Dresden, then spend Day 9 in the Dresden area (e.g., Schloss Pillnitz - very nice palace, not touristy, or Meissen), and then leave Dresden for Frankfurt on the late afternoon of Day 10).

6. Frankfurt is not worth it. IF they don't want to skip Rothenburg and go to Dresden, visiting one of the nicer cities around Frankfurt is a good idea. I suggest Mainz or Cologne. It's easy to reach FRA from Mainz, so if they want to skip Rothenburg, go to Cologne on the morning of day 8, stay an afternoon and the night there, do some more sightseeing in the morning of day 9, then take the train to Mainz around noon and spend a nice afternoon and evening there. It's easy to get from Mainz to the airport, so there's no need to move to FRA.

Concerning your train question: for local transports: use the S-Bahn from Nuremberg to Bamberg and a cheap "Bayernticket" for the local train from Nuremberg to Wuerzburg (they can buy these tickets just before taking the train from the ticket machines in Nuremberg central station).

Use the ICE between Munich and Nuremberg and Nuremberg to Frankfurt/Cologne/Dresden/Mainz, depending on what they want to do. Check prices on www.bahn.de beforehand (you can switch the language to English, the button is there, even if it is difficult to find in the top menu bar) and as early as possible, to get the "Sparpreis" for these connections. These are much cheaper, but you have to take the train connection you're selecting. See the other threads on German trains in this forum for the details...