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The problem was solved I had to remove the old icon for the previous version from the quick launch bar and add a new one for the new version....
Followed the instructions to the letter however still receiving the error message. Neither the two folders or any of the .kext files were there to...
Just installed the "Parallels Desktop 3.0 for Mac build 5600 maintenance update" and now when I go to start up windows XP I get this error...