Simpler Workaround found
I found that while the VM is running, I can:
open VM configure... --> Hardware --> Mouse & Keyboard --> Keyboard: "Don't optimize for games" --> close configure window.
open VM configure... --> Hardware --> Mouse & Keyboard --> Keyboard: "Optimize for games" --> close configure window.
I have to do this every time I start up the VM. Parallels understands when it changes from Don't optimize to Optimize, and remembers the last setting, but does not start up the VM with that setting active each time.
To be clear, you have to do the sequence to select "Don't optimize for games first", then after done, you go back and select "Optimize for games" -- every single time you start up the VM.
I wish I knew how to formally report the bug without paying for the privilege with a support call, but don't know how. If someone else does know, then please report it or tell me how.
Last edited: Dec 21, 2013