Can I change size of Windows XP Virtual Machine Drive?

I am using Parallels and would like to be able to resize my Windows XP partition which is the default 32GB size. I know in the past before 3.0 this couldn't be done but can it be done now? I am using only around 8GB of space so am wasting a lot of hard drive space.

 

You aren't actually wasting disk space unless your virtual disk is in plain format. The default is an expanding virtual disk which only takes up space as needed, so if you are using that your virtual disk size can be reduced by running Parallels Compressor (select it from the "Actions" menu while you are running your virtual machine). If your disk is in plain format, you need to download the beta so that you can get the Parallels Image Tool that will allow you to convert your virtual disk to expanding format.