Increased Disk size and/or Expanding Disk not being recognized in Guest OS

I am trying to apply an upgrade to Xcode within a Guest Mac OS running Mojave. I am receiving a "Your disk does not have enough free space" error. I am then going into the guest configuration and adding more disk space and verifying that expanding disk option is selected and trying again. I am getting the same error. I am further adding more disk space, but again getting the same error. The internal guest storage is reflecting <>68 GB while the guest configuration has 125 GB allocated to it. The error is indicating that I require 11 GB more space regardless of what I configure the disk size to be. Any ideas as to what I am doing incorrectly?

 

What is the best way to get help/response on this issue? Do I need to use twitter instead?

 

I have exactly the same problem now.

My guest OS is macOS 11 Big Sur. I have assigned 256GB to the guest. The volume where the guest is located shows >300GB available.
Current size of guest OS disk is 68GB.

When I try to update macOS, it says: "Your disk does not have enough free space"

How can I force the guest OS to see the real amount of free storage?

 

Parallels 16+ is not ready for Big Sur - VMWare Fusion does a better job at running Big Sur.