screen resolution not changing when going in to full screen

I quite often switch between windowed and fullscreen mode depending on what I need to get done in mac/windows at the same time.

Just recently, I noticed that when I switch from windowed into full screen there's a black border around the desktop, and windows thinks it's a smaller screen - the same size it was in the window, and doesn't automatically resize.

I can right click on the Windows 7 desktop and adjust screen resolution and it then uses the full screen, but it used to do this automatically.

Has anyone seen this before? Found a solution?
 
I've rebooted numerous times and reinstalled parallels tools in the vm (running windows 7 64 bit). Still the same, no automatic resizing of the windows desktop size when changing from full screen to windowed.

Am I alone in seeing this?
 
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