OK, let me clarify what happens in detail for me.
In single OS window I normally have the VM window occupying about half the (30 inch 2560x1600) screen, and the display properties in XP show 1384x927.
If I drag the bottom right hand corner to make the VM window bigger the VM desktop expands, and the display properties say 2045x1425. and if I drag it to be smaller they go to 900x700. (just example numbers, depends where the corners actually go to). This is what I have assumed the dynamic resolution tool to be.
In each case the size of the text and icons remains the same, the desktop just got bigger. Changing the resolution in XP in fullscreen mode makes a small window with large black borders.
This is not the same as what happens on a an actual PC when you change the resolution in display properties, where the image is scaled to fill the monitor and a low resolution setting gives very large text and icons. Is this perhaps what you want to achieve and were expecting the "Dynamic resolution tool" to do?
If large text and icons are what you want, try changing the preference setting in Parallels (not XP). Go to "Parallels Desktop" menu heading, Prefernces, then Appearance tab, then tick the "Change Mac OSX resolution" box.
It does strange things on my dual monitor set up, but may be what you are looking for.
Mike
Last edited: Aug 26, 2007