problem converting virtual machine after upgrade

I just upgraded from Parallels desktop for Mac 2.5 to 4.0. The Windows XP in my old version of the software crashed like crazy. The installation went smoothly until I tried to launch it for the first time. I then got the window that prompted me to convert my virtual machine to the new format. I then had the choice of backing up and converting or just converting. I chose the latter and then clicked 'yes' to confirm. I then got an error message that said something to the effect of "make sure you have permission to rename the application/parallels/.... folder". Basically, the conversion failed because of this error.

Unfortunately I don't know how to get back to this point again and see the error message so I'm not sure exactly what it says. Now when I start up Parallels I get the welcome screen. I assume what I need to do now is import a virtual machine which I suppose means importing the copy of Windows XP that is buried somewhere on my hard drive. Does anyone know how I can find this?

Thanks.

 

more information

Here is some more information that might help:

system: 10.5.6
guest OS: Windows XP

Sorry but I cannot obtain a screenshot because I haven't successfully been able to get back to the window that requested converting my virtual machine to the new format. As I said in my original post - I now get the welcome screen. I don't know how to locate my virtual machine to convert. Where does such a file exist? I've read the users manual and there doesn't seem to be any useful information on this. At this point I've spent $50 updating my software and have now lost all functionality.