my girlfriend just upgraded parallels from 3 to 4 when she inserts a cd-rom in her mac, it is listed in windows (xp) as a network drive, not as a real cd i can't find any configuration to change this, any ideas?
It's accessed through shared folders. If you need a virtual DVD Rom drive inside virtual machine you should go to Configuration Editor and add Virtual CD/DVD Drive. After this you will be able to connect your physical drive or image files to virtual machine.