David, I agree with you on the glitch.
I solved the issue like this:
With your PC (i e Windows under Parallels Desktop) running, do the following:
1. In windowed mode, uncheck both allow to change-boxes under Parallels Desktop --> Preferences --> User Interface
2. choose full screen with the PC, in Windows display settings set the resolution to the size that you would like the window to have later on when in windowed mode, 800x600 for instance.
3. move back to windowed mode, the window will now look too big again, however, redo the Windows screen settings once more (although now do it while in windowed mode). The window now shrinks
4. check the allow to change guest screen resolution under Parallels Desktop --> Preferences --> User Interface
5. Thats it! Now, when you are in windowed mode, the window will only use some 800x600 pixels (or whatever you chose) of your Mac OS screen. Whereas when youre in full screen mode, the Windows environment will use the same resolution as Mac OS due to your checking the box telling it to do so, no black borders, just full screen.
/J
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