Can't customise Icons on Parallels desktop

Been trying to customise icons on parallels desktop (the same folders that are on Mac desktop) with not success.

I have ico files in correct format that work on a windows laptop I have but do not work on parallels.

I right click / change icon / browse to file / choose. the picture previews in the window at top but when I click on apply the folder icon stays exactly the same.

Can this be done in Parallels or is this a bug?

I have MacMini 8gB RAM running windows 11 Home build 22000.376 on parallels Version 17.1.0 (51516) on 34" ultra wide screen monitor