upgrading parallels 5.0 to 9 and existing files configs etc

I want to upgrade to the newest version from an older one and also from 10.6 to Lion at the same time. I read I should backup what I have now but don't know how to do that nor exactly what needs to be backed up. I have Bootcamp on my mac and my current version of Parallels run Windows XP. What do I have to do to install correctly? Please help a newbie.

 

Yes, You should backup before doing this. I recommend backing up with TM machine if it is available in whatever OSX you are currently running. You can also use SuperDuper of CarbonCopyCloner. This will make a nearly identical copy of your current setup. Off the top of my head, I can point out that if you use DropBox, you will have to re-authenticate, this should not be a problem, as long as you know your DropBox password. (yes, there are some situation where one may not know the password for DropBox.) There may be other minor anomalies that you many run into with your particular setup, upon a restore from TimeMachine of SuperDuper. (I have never backed up or restored from CCC, so I couldn't tell you much about that one, other than I have seen it is highly recommended)

Installing it is easy, if possible you should upgrade to Mountain Lion instead of Lion if your machine is supported. If you just do a direct upgrade of your OSX and download the newest PD, or PD8 if you choose to save a couple bucks. I don't think that there should be any real issues for you to run into. Your VM will automatically install the newest Parallels Tools upon the first start of it.

One bit of advice to avoid potential issues, is to make sure that you SHUTDOWN the VM, while performing these tasks. Do NOT leave them in SUSPENDED or PAUSED.

It sounds like you use Parallels to run from your BootCamp partition, although you were not completely clear on that. You just mention that you HAVE boot camp, and that you run WinXP on Parallels. If that is the case, you probably do not Pause or Suspend the VM, as I don't believe Parallels allows that on when running from a BootCamp Partition.

Another bit of advice, and this one, I would like to hear others chime in on, is that you should switch to an actual VM machine, and not run it from the BootCamp partition, unless you REALLY need to run it separately and boot natively and still boot the same machine from within OSX.