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@dylanc1 After some time Parallels managed to provide me with a solution to this problem. FYI this is what has helped me (hope it works for you too):
I am writing on the post to publicly let anyone know how disappointing Parallels suport is in case of any serious issue. I've been in contact...
I've replied in the comment above, not sure you/anyone from the parallels stuff got notified. Really looking forward to solving this issue.
Hi, IMG_7202 shows how screen looks normally, 7201 shows how parallels look like when in full screen. Notice the borders on the left and right...
Hi! Filling screen on my MacBook Pro 16 M1 Pro has stopped working properly for full screen mode around parallels 18.3.X. Previously VM would fill...