Image File corrupt and not enough space

Please help......spent days trying to get this to work feeling very frustrated.
Have installed XP on Bootcamp successfully. Installed Parrallels 4 , went through New Virtual Machine > Custom.... , all seemed ok.

So I tried to update XP with SP2 update but it fails with insufficient space but I gave the VM 32GB expanding and the bootcamp is sitting on the same space. No data or apps are installed its all new ( including the iMac itself).

So I went to the config for the VM and looked at the hard disc, there are two buttons "bootcamp" and "image" , it says the latter is corrupt. I repeated this twice, deleting everything else without success.

Please help someone

 

Slight Correction for clarity

Ok just to be clear it actually says "Incorrect Configuration " for the image file, and just for more clarity my bootcamp space is also set to 32GB

 

If it is Boot Camp, please delete Boot Camp VM and just start Parallels Desktop, and create new Boot Camp based Vm

 

Still got "Image File Incorrect Disc Configuration"

Having problems still. I have deleted and recreated my VM several times , each time when I check in VM Config under hard disc under Image File I get "Incorrect Disk Configuration " . What am I doing wrong

My XP SP3 is installed via BootCamp in a 32 GB partion.

XP seems to work but last time after starting install some software I ended with the VM crashing and the when I tried to reboot both in Parrellels and in Bootcamp I got "NTDLR is missing "

I could not get into recovery console within the VM as the keyboard would work to press "R"
Within bootcamp I could and tried the recommended fix ( copy e:\i386\ntldr c:\
copy e:\i386\ntdetect.com c:\) and was told I did not have permission. So gave up and did a fresh install. Still got the problem when I check the VM Config with the Image file.

I am on the verge of giving up with this

Please help me somebody

 

Any operations related to repair Boot Camp partition, should be performed , only in real Boot Camp