I have the same issue when going from PD 15 to 17, only 1024x768 in resolution and reverting back to PD + Tools to v15 and some other suggestions in the forum didn't help, the only thing that fixed it was PD + Tools v15 and an old backup of the whole Big Sur VM.
So, either Big Sur is storing something somewhere that makes the revert of the Parallels Tools useless or PD 17 does something funky with the VM, like maybe a custom EFI or NVRAM setting that screws things up...