Parallels does not delete snapshot files, insufficient VM storage to launch Win10

Hello! I'm running Win 10 via Parallels 16 on my 2019 MacBook Pro
Everything was great until I enabled the SmartGuard feature. I was careless enough not to specify the snapshot rules, so Parallels actually took 3 snapshots of my VM, accumulating hundreds of GBs. Eventually, I'd get a notification "not enough storage" on a regular basis:

When I realised that was the issue, I disabled the feature completely and deleted all the snapshots through the manager tool. But my VM kept taking up more and more space. I tried resizing my WIn 10 VM to give it more storage but got this notification.


But when I click on the left button, there are no snapshots to manage...
I went to the parallels folder, revealed the package contents in Win10.pvm, and found that there is an hdd.0 image that weights 252GB, the maximum storage allocated to a Parallels VM:



Now, I tried placing the 252GB file into the bin, but it still says there is not enough space.


At this point, I can't seem to find a solution, and am really fearful I might have to bid farewell to all my files, games, etc. stored on Win 10. I've searched everywhere for an answer, but to no avail. My last hope is that someone here went through the same thing and can help me..

 

Hi Adeboye, I can't seem to send a technical report - this is the error that I get when trying to collect the daya