Stacy,
FYI ... I have "re-transferred," using Transporter, the full image from my WinXP Pro PC (actually 44.03GB - which took 15 hours over a 1Gb network). I double-click the shortcut on the desktop, and ... voila - the same problem: no, keys, mouse, or "send keys" function.
I have, again, interrupted the startup by pressing F8. Again, I DO have keys (cursor) control here. When selecting "Safe Mode," the VM greets me with the "Ctl+Alt+Del" option - still no keys, mouse or "send keys."
As I'm now home, I have connected my external keys & mouse to the MacBook. In checking the USB options, there are NO ticks next to either "Apple Internal Keyboard/Trackpad," "Apple Keyboard," or "Apple Optical USB Mouse." I have tried to install Parallels Tools into this VM, but, as I can't "log in," it won't work.
At this point, I am convinced this is an issue with Transporter not building the bootable disk properly. I have also posted this problem on the Transporter Forum page, as I noticed there seems to be a similar pattern here. See:
http://forum.parallels.com/showthread.php?p=88055#post88055
Your assistance in resolving this issue would be greatly appreciated.