How do I reduce the size of the Virtual Hard Disk?

I've just moved Parallels/Windows 7 onto a MacBook Air, but the virtual disk is 64GB, rather larger than I would like. Can I set up a new Virtual Machine on the Air, with disk size, say 20GB, and then migrate all my programs and data from the old VM (which would be on the same Mac disk? The thing I'm not certain about is whether I can use my Windows 7 disk to set up a new Virtual Machine, which would be the second VM set up with the Windows 7 disk.
Thanks!