1) That "jail" in this case is indeed hell--after all, there was no way that the unmerciful debtor was ever going to "pay the last penny" of his debt, just like there is no way for us to pay our debt to God.I tend to go with the former, seeing as the debtor's original debt was put back upon him and because of its size, he was sentenced to an effectively eternal punishment.2) That "jail" does indeed refer to temporal punishment of one who is "saved," but it is punishment that God inflicts on us in this life rather than the hereafter.
In any case, you've just demonstrated that you can perform eisegesis (reading into the text) to find a thin justification for a previously-existant theology, but you've not shown that you can demonstrate Purgatory from decent exegesis (reading from) of the Scriptures.
Can you?
I see a stark contrast between being sold to slavery with the whole family and being made repay a debt, after which there is freedom. I know that in the context of the teaching of Christ about kingdom of Heaven, everlasting life, and forgiveness of sin, the parable has a soteriological meaning, rather than a plain ethical meaning that is on the surface. These elements are sufficient to conclude that those who are forgiven yet burdened with sin work it off outside of their free will (in jail), and therefore after their death. The parable effectively describes the Purgatory, it is the natural reading of the parable.
Your exegesis is defective because it does not take into account the difference between the eternal punishment and temporal one, that is so prominent in the text, and makes God first granting, then revoking his mercy. As to the size of the temporal punishment, no one is arguing that Purgatory is short or easy, only that it is finite. It is you who starts with the assumption that Purgatory cannot be in the Scripture because Luther said so, then proceeds to explain the parable away contortedly.
I'll be back tomorrow.