Change partition in Mac Drive

We got a new iMac and it came with parallels and windows XP installed. It appears that they partitioned the Mac drive dedicating 80 GB to Windows! Is there a way for us to change the setup to a VM with expanding drive like I have on my other mac without reinstalling windows and parallels from scratch. I'd like to remove the Mac Partition to have one large drive and have the VM be the expanding type (as it gave me no trouble over five years with my old mac and will give me most flexibility n the new machine).
I would appreciate any help on how to do this if it can be done.

 

In case of Boot Cam it is not possible