how to go from boot camp to parallels...?

Is it possible to save all the stuff (including the OS) from Boot Camp and put it into Parallels, or do I have to start from scratch and reinstall Windows XP? What about saving things (in XP) like the bookmarks in IE? If I backup the Windows drive with Time Machine can I use the backup somehow? I am totally lost..... my wife is Chinese and just got landed immigrant status but someone helped her put Windows on her MacBook only through Boot Camp so she practically never uses the Mac side which I am trying to get her to do most often. But there are a couple of translation programs in Windows that she needs....

Please, can anyone help me get her stuff into Parallels so I can ditch the Boot Camp ASAP?

 

Well, actually you can easily create a virtual machine based on a boot camp partition, this is the easiest solution here to use your Windows boot camp partition on the Mac side.

Another way is to use the Parallels Transporter. Just install Parallels Agent to the Windows on a boot camp and use "migrate locally" option. Check the follwing part of the guide for more information:
http://download.parallels.com/desktop/v4/docs/en/Parallels_Transporter_Users_Guide/22656.htm
You would need to move the resulting .hdd file to the Mac side (via external hard disk for example) and then create a virtual machine based on it. For that - create a new virtual machine, choose the "Custom installation mode" and point to the .hdd that you copied.