Read all the posts; Having the same problem
*My user is not a local machine user but a domain user, and I also tried: <DOMAIN NAME>\msmith
*I've tried creating a new user with admin privs
*I've tried user: Administrator
============ Part parallels.log ==============
05-24 18:44:50.109 I /AgentCore:5220:7ec/ Detected Windows version 5.1 (2600) SP 3.0 prodtype 1
05-24 18:44:57.796 F /CAuth:5220:7ec/ LogonUser(): an error was occurred 1789
05-24 18:44:57.796 F /AgentCore:5220:7ec/ Error : Authentication for domain '' user 'msmith' (passwd : <non-empty>) failed, error 1789.
============ Full parallels.log ==============
05-24 18:42:48.328 I /P2VAgent:5220:1130/ Parallels Transporter Agent build 6.0.11994.637263
05-24 18:42:48.328 F /cmn_utils:5220:1130/ ParallelsDirs::Init( ) was called. Current app mode = 1 ( DESKTOP_MAC ) build version: 6.0.11994.637263 Thu, 17 Feb 2011 04:59:10
05-24 18:42:48.328 F /ComputerData:5220:1130/ Current process session id 0.
05-24 18:42:48.343 F /ComputerData:5220:1130/ Simple auth by pid - done.
05-24 18:42:48.343 F /ComputerData:5220:1130/ Same current user, no impersonation required.
05-24 18:42:48.343 I /P2VAgent:5220:1130/ main: current user is 'msmith'
05-24 18:42:48.359 I /Application:5220:1130/ Application help path is 'C:\Program Files\Parallels\Parallels Transporter Agent\Help\'
05-24 18:42:48.359 F /WinFirewall:5220:1130/ Authorized application C:/Program Files/Parallels/Parallels Transporter Agent/ParallelsTransporterAgent.exe is disabled in the firewall.
05-24 18:42:48.359 F /WinFirewall:5220:1130/ Authorized application C:/Program Files/Parallels/Parallels Transporter Agent/ParallelsTransporterAgent.exe is now enabled in the firewall.
05-24 18:42:48.375 F /WinFirewall:5220:1130/ Authorized application C:/Program Files/Parallels/Parallels Transporter Agent/ParallelsTransporterAgent.exe is disabled in the firewall.
05-24 18:42:48.375 F /WinFirewall:5220:1130/ Authorized application C:/Program Files/Parallels/Parallels Transporter Agent/ParallelsTransporterAgent.exe is now enabled in the firewall.
05-24 18:42:48.375 F /WinFirewall:5220:1130/ Authorized application C:/Program Files/Parallels/Parallels Transporter Agent/ParallelsTransporterAgent.exe is disabled in the firewall.
05-24 18:42:48.375 F /WinFirewall:5220:1130/ Authorized application C:/Program Files/Parallels/Parallels Transporter Agent/ParallelsTransporterAgent.exe is now enabled in the firewall.
05-24 18:42:48.375 F /cmn_utils:5220:1130/ ParallelsDirs::Init( ) was called. Current app mode = 1 ( DESKTOP_MAC ) build version: 6.0.11994.637263 Thu, 17 Feb 2011 04:59:10
05-24 18:42:48.375 I /MsPackWrap:5220:1130/ Trying to load MsPack library, path 'C:/Program Files/Parallels/Parallels Transporter Agent/mspack_prl.dll'
05-24 18:42:48.390 F /ComputerData:5220:1130/ Current process session id 0.
05-24 18:42:48.406 F /ComputerData:5220:1130/ Simple auth by pid - done.
05-24 18:42:48.406 F /ComputerData:5220:1130/ Same current user, no impersonation required.
05-24 18:42:48.421 I /ComputerData:5220:1130/ TR00005.03: 0
05-24 18:42:48.421 F /AgentCore:5220:1130/ Initializing DA_API.
05-24 18:42:48.421 F /AgentCore:5220:1130/ DA_API was initialized successfully.
05-24 18:42:48.421 I /P2VAgent:5220:1130/ Host adapter 0 name='Dell Wireless 1390 WLAN Mini-Card - Teefer2 Miniport', address='0.0.0.0'
05-24 18:42:48.421 I /P2VAgent:5220:1130/ Host adapter 1 name='Broadcom NetXtreme 57xx Gigabit Controller - Teefer2 Miniport', address='192.168.1.3'
05-24 18:42:48.421 I /P2VAgent:5220:1130/ Host adapter 2 name='VirtualBox Host-Only Ethernet Adapter - Teefer2 Miniport', address='192.168.56.1'
05-24 18:42:48.421 I /P2VAgent:5220:1130/ Available agent IP address to connect 192.168.1.3
05-24 18:42:48.421 I /AgentCore:5220:1130/ Created Server object to listen IP = Port = 1622
05-24 18:42:48.437 I /ptioch:5220:1e4/ Network server obj state changed to 1
05-24 18:42:48.437 I /P2VAgent:5220:1130/ Usb cable check is started
05-24 18:42:48.437 F /P2VAgent:5220:9f0/ Started Hardware Monitor thread
05-24 18:42:48.453 F /AgentCore:5220:1130/ Server side : Listen started, IOChannel mode 0, res 0x8000000
05-24 18:42:48.500 I /P2VAgent:5220:1130/ Agent computer notification 50, 0x8000000
05-24 18:44:49.968 I /ptioch:5220:838/ Received network client '{83218ec0-7cbb-4b4a-9e58-fc2925a22e44}' connection event
05-24 18:44:49.968 I /ptioch:5220:838/ Client connected
05-24 18:44:49.968 F /AgentCore:5220:838/ Server side : Client connected, IOChannel mode 0
05-24 18:44:49.968 I /P2VAgent:5220:1130/ Agent computer notification 54, 0x8000000
05-24 18:44:50.046 I /ComputerData:5220:7ec/ TR00052.03: 54
05-24 18:44:50.062 I /ComputerData:5220:7ec/ TR00052.05: 54
05-24 18:44:50.109 I /AgentCore:5220:7ec/ Detected Windows version 5.1 (2600) SP 3.0 prodtype 1
05-24 18:44:57.796 F /CAuth:5220:7ec/ LogonUser(): an error was occurred 1789
05-24 18:44:57.796 F /AgentCore:5220:7ec/ Error : Authentication for domain '' user 'msmith' (passwd : <non-empty>) failed, error 1789.
05-24 18:44:57.796 F /AgentCore:5220:7ec/ Current user credentials check res : 0x8B1A002
05-24 18:44:57.796 F /AgentCore:5220:7ec/ Handshake info validation finished with res : 0x8B1A002
05-24 18:44:57.796 I /P2VAgent:5220:1130/ Agent computer notification 21, 0x8b1a002
05-24 18:44:57.843 I /AgentCore:5220:1130/ AG00005.08: ; ; 145858562
05-24 18:45:37.187 I /ComputerData:5220:858/ TR00052.03: 15
05-24 18:45:37.187 I /ComputerData:5220:858/ TR00052.05: 15
05-24 18:45:37.187 I /ComputerData:5220:858/ TR00052.11
05-24 18:45:37.187 I /ComputerData:5220:858/ TR00052.15
05-24 18:45:37.187 F /ComputerData:5220:858/ ABORT: computer type 5
05-24 18:45:37.187 I /ComputerData:5220:858/ TR00020.11: 7; 1
05-24 18:45:37.187 I /ComputerData:5220:858/ TR00020.20: 7
05-24 18:45:37.187 I /ComputerData:5220:858/ TR00005.03: 0
05-24 18:45:37.187 I /ComputerData:5220:858/ TR00020.12
05-24 18:45:37.187 F /ComputerData:5220:858/ TR00020.21
05-24 18:45:37.187 I /ComputerData:5220:858/ TR00005.03: 1
05-24 18:45:37.187 F /ComputerData:5220:858/ TR00020.13: 0
05-24 18:45:37.187 I /ptioch:5220:1e4/ Network server obj state changed to 0
05-24 18:45:37.203 I /ptioch:5220:838/ Received network client '{83218ec0-7cbb-4b4a-9e58-fc2925a22e44}' disconnection event
05-24 18:45:37.203 I /ptioch:5220:838/ Client disconnected {83218ec0-7cbb-4b4a-9e58-fc2925a22e44}
05-24 18:45:37.203 I /AgentCore:5220:1130/ AG00005.09: 0
05-24 18:45:37.203 I /AgentCore:5220:1130/ AG00005.10: 0
05-24 18:45:37.203 I /ComputerData:5220:1130/ TR00005.03: 0
05-24 18:45:37.203 F /AgentCore:5220:1130/ Server side : Listen stopped, IOChannel mode 0
05-24 18:45:37.203 I /AgentCore:5220:1130/ AG00004.11:
05-24 18:45:37.203 I /ComputerData:5220:1130/ TR00005.03: 0
05-24 18:45:37.203 F /AgentCore:5220:1130/ Server side : Client disconnected, IOChannel mode 0
05-24 18:45:37.203 I /ptioch:5220:1130/ Resetting channel ...
05-24 18:45:37.203 I /ptioch:5220:1130/ Clearing channel interface for services
05-24 18:45:37.203 I /AgentCore:5220:1130/ AG00004.11:
05-24 18:45:37.203 I /AgentCore:5220:1130/ AG00004.11:
05-24 18:45:37.203 I /ptioch:5220:1744/ XmlCmd service : shutdown requested, exiting ...
05-24 18:45:37.218 I /ptioch:5220:17b0/ Rmdi service : shutdown requested, exiting ...
05-24 18:45:37.218 F /AgentCore:5220:1130/ DA_API was deinitialized.
05-24 18:45:37.218 I /nbdsrv:5220:1130/ Nbd server: stop with 0 images
05-24 18:45:37.218 I /nbdsrv:5220:1130/ Nbd server: wait 0 images
05-24 18:45:37.218 I /nbdsrv:5220:1130/ Nbd server: all images were stopped
05-24 18:45:37.218 I /nbdsrv:5220:1130/ Nbd server: wait 0 images
05-24 18:45:37.218 I /nbdsrv:5220:1130/ Nbd server: all images were stopped
05-24 18:45:37.218 I /ComputerData:5220:1130/ TR00009.02
05-24 18:45:37.218 I /ComputerData:5220:1130/ TR00005.03: 0