What a strange and time-wasting experience. 1. I backed up my Parallels VM (I used Disk Utility to image the Parallels folder), and made sure I had my old v3.0 activation code standing by. 2. Started the upgrade to Parallels 4. a. successfully converted the VM to the new format b. mid-way through step 2, something went wrong that left a brief message that the upgrade couldn't continue. 3. What the hell: nothing to lose so I shutdown the VM, rebooted the Mac, and re-started Parallels. To my surprise it continued to install for a while, then ran out of steam. So, shutdown VM and reboot. Continued to the point of loading the "Irish Meadow" background and finally gave me some mouse control inside the VM window. 4. Read through all the "troubleshooting" web pages, but my situation isn't covered. In the meantime, installer finished step 4 (install Parallels Tools) and said it was now configuring the VM. 5. I left the install process to do its thing overnight (Activity Monitor clearly showed lots of work, and every now and then the Windows cursor would change shape, or a message like "Found new hardware" would appear and disappear. In the morning, still not done. But, enough of WinXP was up that I could my desktop icons, use them to run a few programs (like a mapping package), but all in a small window, with no "Start" menu, and other weird effects. 6. Finally, I ran out of patience and needed to get some work done. Stopped the VM. Deleted the *.pvm file. Uninstalled Parallels 4. Rebooted. Copied saved v3 VM files back to the Parallels folder. Installed Parallels 3 (5608). Rebooted. And, hey presto, we're back to a working version of Windows. My conclusion: this product is ready for a "public beta" (which is what is happening out there, even if that isn't what Parallels intended), but it isn't ready for release as a working product.