I wish to share how i resolved the disc space problem i has with my virtual machine. My physical disc capacity is 250gb and the virtual machine size was at 230gb . MY virtual machine was an expanding disk meaning that i was facing the risk that i would not be able to run the VM due to lack of space on the physical drive and yet i have almost 100gb free space on my VM. i tried the re-size , compress function on the parallels desktop configuration tabs of parallels but it did not work. I also used the image tool with no success and i always kept on getting errors related to the file system. I just could not reduce the size of my VM. I am running windows 7 on the parallels VM. What did i do : i. I found out that there is a disk management utility in windows called Dynamic disk and volume management provided to Microsoft by VERITAS Software Corporation. If you type "partition" into the search box on windows explore , it brings it up. It allows you to re-size the virtual disc by getting rid of all the free space on the VM . ii. When i went back to the parallels desktop configuration tool , i found out that i could now use the re-size function to adjust my VM to whatever size i wanted. Best of all , when i checked the new size from the parallels desktop configuration tool, i was seeing the size that i choose (130gb) when i resized the VM using the windows 7 utility. I hope this helps someone out there as i spent 3 weeks scouring the web for a solution and i saw that there were many people in the same spot with no clue on what to do .