Drag & Drop from Mac to VM not working

I recently updated my Windows 8 Volume Licensed Parallels VM install to Windows 8.1. That seemed to go fine.
I'm using Parallels Desktop for Mac Build 8.0.18608 (Revision 898384; July 17, 2013).
Now when using Drag & Drop from Mac to VM, a window pops up for Language Preferences instead of copying.

I tried to reinstall Parallels tools and it failed.
I tried to follow this KB article yet I don't have a Windows 8.1 listed.
Any help is greatly appreciated.

 

I tried to uninstall/reinstall parallels tools and the process failed and asked me to restart. When I restarted, Windows 8.1 refused to boot and sent me to repair options instead. I reverted to an earlier snapshot... How do I get Parallels tools reinstalled??

 

Just tried to install Parallels tools again and it killed my VM. It refuses to boot so I have to revert to snapshot again.

 

I'm having the exact same problem. Parallels Desktop for Mac 8.0.18608. Windows 8.1 running inside the VM. Drag-and-drop from the Mac desktop to the VM is dead. A clean re-install of Parallels Tools does not help.

 

I contacted Parallels support and their suggestion below didnt help. It actually hosed my Win 8.1 Pro VM so that it was again unrecoverable:

What worked for me was reverting to a snapshot and then using Windows to restore the last known good restore point...
All seems good now as all Parallels tools features are working again.

 

Are you running Windows 8 or Windows 8.1 now?

Here's the problem I'm having. I'm running Parallels Desktop for Mac 8.0.18608. I have upgraded my VM from Windows 8 to Windows 8.1. At first, a lot of things didn't work but a clean re-install of Parallels Tools fixed (almost) everything.

There is one thing that does not work, and I believe this to be a reproducible problem with Parallels 8 and Windows 8.1: when you drag something from the Mac desktop to the Windows 8.1 VM, then it won't drop. It brings up the Windows Language Preferences: