Reclaim function destroys VM

Hello,
I have latest Parallels Desktop (12.1.1) on macOS 10.12.2 with Windows 10, 32bit version. This VM was not used for long time, so I needed upgrade to current Win10 release so I let it go. From 14Gb before update it grew to ~35Gb, so I run Disk cleaner in Windows and the disk was cleaned, the size of the VM drive is now ~15Gb BUT with ~17 Gb reclaimable space. VM works fine, can log in, run, test,...
Here the problem starts:
Already twice (yep, I have backup) when I run the Reclaim to reclaim those 17Gb of unused space the disk shrinks but the VM after this cannot boot. I can delete the shrunk VM, move in the backup (large) back and it boots well and works fine, but any attempts to shrink the disk to reasonable size and VM is unbootable. The message in the black window is: "Trying to boot from Primary Master IDE drive. "
In the "Hardware" in "Hard disk 1" have the "Real time disk optimization" checked, but that does nothing, even after hour of sitting there with 17Gb of reclaimable space nothing shrinks... I have the disk set be split to 2Gb files.

On a side note, what does the "Compress" in this "Hard disk" section of control panel actually do. On line help is not helpful...

 

Found way around this problem:
1. Uncheck Real time virtual disk optimization
2. uncheck the "Split the disk image to 2 GB files" and let that finish. Creates one large file (which did not remove Reclaimable space, hm...)
3. Run reclaim button. That now seems to work and does not destroy the disk. VM still boots...
I guess something was not expected to be run/checked together here?

 

Thank you for sharing this.
Also with checked "Split the disk image into 2 GB files" option you will be unable to reclaim the hard disk.