Problems with backup and convert of 3.0 to 4.0

I recently upgraded from Parallels 3.0 to 4.0 and everything is working fine. However, I chose to backup the 3.0 vm before converting just in case there were any issues. It said the back would take about 35 gigs of space. It ended up taking more than 50 gigs. Also, I can't find it on the computer to delete. Meanwhile, The current vm is taking up 105 gigs which seems way to large (about twice the size of the previous vm.)

is the backup and current version the same file readable by both versions? How do I reclaim that hard drive space?

 

Parallels Desktop version 3 VM is folder with Virtual machine name and with (backup) at the end,
I guess you put it inside VM,
right click on Virtual Machine pvm file - show package contents, you probably will see your VM folder inside

 

Problem Solved!

Thank you for the prompt response. Your help has resolved my issue. I did not realize that the file had could be separated into its contents.