diskimages-helper gone haywire after upgrade to v5

I upgraded from Parallels for Mac version 3 to 4 and now 5. I have always used File Vault due to corporate edict. For no apparent reason, at some point soon after upgrading to version 5, I noticed that the diskimages-helper process runs constantly and reads 16MB/s from the disk. It only happens on the login under which I have an XP VM in Parallels and Parallels does not have to be running. I can turn on file vault on other logins and the haywire process does not run. I notice that Parallels has two folders in /Library/StartupItems. I tried removing them to no avail. The only thing in my login items is a helper application for my corporate VPN which has been unchanged for a year.

Any suggestions on what I might do to solve this problem? I tried booting in Safe mode and running repair permissions etc.

TIA