Parallels Desktop 6: XP unusable after installing tools

Host:
MacBook Pro 2.66MHz Intel Core 2 Duo; 8GB; OSX 10.6.4

Guest:
XP Pro SP3 (work environment that got created by Transporter); allocated 4GB

Problems:
XP works fine when tools are not installed. However, as soon as I install Tools, XP becomes virtually unusable (after the second reboot/log-off). Installing/re-installing tools completed successfully.

There seems to be a process which takes up all the CPU but Task Manager shows nothing unusual. Video also not refreshed properly.

I've tested a few times and can only conclude that installation of Tools is the culprit.

There have been a few discussion on the net that sound similar to the problem I am experiencing but no resolution yet.

Greatly appreciate if anyone can help or point me to the right direction.

Thanks & Regards,
Dat

 

I forgot to mention that I am using PD6 Build 6.0.11826 (Revision 611899; Oct 19, 2010)