Hello,
this is quick update on my attempts to fix according to Parallels tech support for those interested. Last suggestion was to wipe out all Parallels tools (that is 4 step procedure) including cleaning registry and system files. Then repair the WindowsXP installation using repair option from installation disk. Took about 3 hours to finish and did not work. Luckily, my MBP can parallel process while I was pushing this forward so I wrote quite a bit of new stuff and analyzed data using Mac side.
On the other hand, I have created new VM with WindowsXP installation (using the express method), took only about 40 minutes and everything works fine in this new VM. I can suspend and revive without loosing communication.
I will just go and install those few Windows programs into the new VM and call end to this misery.
By the way, I have two different VMs which were updated from 2.5 to 3.0 and now to 4.0 which do the same thing. Both will be now replaced.