How I solved the problem
Background:
New MacBookPro..installed Paralells 7, Windows Home Premium 7, upgraded to Parallels 8, then Windows 8. Used the dmg paradigm for parallels 8 (eligible for free upgrade).
Fairly seamless upgrade until the notation: "Paralles Tools not installed" appeared at the bottom of the VM. The "gear" icon did not solve the problem. The parallels KB was partially helpful. One of the articles led me to
parallells desktop.app/contents/resources/tools/prl-tools-win.tar.gz.
Clicking the *.gz file extracted it and placed a copy of the folder prl-tools-win ain my user/download folder.
From the Win 8 virtual machine in the "window" mod, I browsed to the prl-tools-win folder, opened the folder, and ran the setup.exe.
The paralalles tools installation wizard opened and installation was seamless.
Hope this is helpful. I am a PC guy and just playing with mac and parallels (may become addicted) works great in the coherent mode this far. Wife has a mac & I've had to learn more than I really wanted to know.

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