This card can be used as a substitute for any 1 Fusion Material whose name is specifically listed on the Fusion Monster Card, but the other Fusion Material(s) must be correct. Cannot be used as Fusion Material otherwise. If this card is Special Summoned (except during the Damage Step): You can Fusion Summon 1 Fusion Monster from your Extra Deck, using monsters you control as Fusion Materials, including this card.
You can use Poly, you just cannot use this card as anything besides fusion substitute.
So if, for example, there's a fusion that has "1 DARK monster" as one of the materials, you cannot use this card to fulfill that, as then this card would be used as a DARK monster instead of as a fusion substitute. (And remember, you cannot use fusion substitute to replace non-specific material.)
"except during the damage step" means you cannot use Parasite's effect if you special summon it using Pinch Hopper or Howling Insect. To trigger its effect you can only use cards like Powerful Rebirth or Limit Reverse