parallels 3 can't find virtual machine

I've recently reinstalled parallels 3 - I had many problems creating an XP virtual machine but have managed to resolve most of them.
XP appears to run OK; my only niggle is that on opening parallels, it always asks me to start installation of a new virtual machine. When I cancel the app quits. The only way I can start the vm is to double click the actual .pvs file.
During prior problematic installations, I ended up with vm names like "XP 1 1 1 1 1 " - these remained even after deleting the actual vm folder and contents; does anyone where parallels stores these index files, and if I can 'point' the app to the current vm folder? I've already double checked the path is correct in preferences.

thanks