I received this message after trying to start my machine... Virtual machine cannot be started because of the following problem: Parallels Desktop is unable to access the virtual hard disk image file /Users/jmcdonell/Documents/Parallels/Microsoft Windows XP 1/winxp.hdd. The file is corrupted. DO I need to reinstall Windows XP? Won't I lose all my files if I do that? Please say it isn't so!!
Try http://kb.parallels.com/en/4680, be careful and test on all hds files you found, and make sure you have backup , simply copying VM folder to safe place first