What is the ideal setting? Right now I have memory set at 512MB. I have 2GB of RAM on my Intel Mac. I'm trying to make my Windows image as efficient as possible.
Ok. Probably between 768-1GB. Make sure you turn on the setting via the Property window to optimize for VM performance. In the Menu Bar -> Parallels -> Preferences allow Parallels to grab 1.25 GB of RAM. Then, play around with the settings to fine tune them.
Also, don't neglect optimizing things on the Windows side. I think it is dpk or darkone who has the name of the Windows tweaker. I tried it once, but it really isn't important enough to me to keep it.