Hi ddahle1970,
It goes much deeper than that. The recreation of the "Shared Applications" folder on your Windows side is tied to version of Parallels Tools that came with Parallels 4. And that menu will come back every time you right-click a file in Windows.
I went through the trouble of renaming the DLLs and Folders that Parallels Tools installs to - and after doing so, every time I right-click a file or press CTRL+C to copy, the Parallels Tools MSI installer would try to launch and of course fail because I have renamed the files it's looking for. In fact, I just deleted the Shared Apps folder from my start menu, went to "My Documents" and right-clicked a Word file. Didn't even have to choose anything off the right-click-menu. And now, the Shared Apps folder is back on my start menu.
Unfortunately, in this version of Parallels Tools, there are no user-configurable install options. And it would appear that the Shared Apps feature is directly tied to the other, actually useful features - like clipboard sharing, mouse synchronizing, etc. The only option is to uninstall Parallels Tools.
BUT, that is a major FAIL as well. I uninstalled Parallels Tools via Add/Remove programs and then Windows cannot find a video driver nor can it find a driver for an unspecified PCI device. Not good.
It looks like we're all stuck having our Mac apps show in our Windows VMs whether we want them there or not. The most frustrating part is that there's a config check box in the VM that makes you THINK you can disable this feature, but it doesn't do anything. Or maybe the most frustrating part is the fact that there doesn't seem to be any response from the Parallels techs about fixing it...
Another point of interest, deleting the start menu folder only temporarily cures half the problem - the other half is that all the Mac apps show up in the "Open With..." context menu. If you want to get rid of those, you have to edit your registry and remove all keys and folders therein that contain the text "(Mac)". This can be a very long and arduous process and is not worth it because they will come back.
Please, Parallels, fix this...