Parallels 3.4128 mem probs

I've got the latest version and latest build with XP and Vista VMs installed.

When I try to run the XP machine I get this:
"Virtual machine cannot be started because of the following problem:

Parallels Desktop is unable to access the virtual hard disk image file /Users/craigroberts/Documents/Parallels/Windows XP/winxp.2.hdd. The file is missing, corrupted, or used by other application."

The file is at that path and when i double-click on the PVS file next to it the same message appears.

Can I repair it?