Success (apparently) with XP upgrade Based on augman's comments, I went ahead and began an upgrade on my PDv3 VMs on my iMac. I appear to have had success overall (just on the first of several XP machines so far); but I noted several differences in the process of upgrading the XP VM from the Vista one. First, I backed up the target VM in the admin account on the iMac. Based on augman's comments, I switched to the iMac's root user account and did the upgrade to PD in that account. This account did not have natural access to the VM folders of the other admin user. After getting up to PDv4, I switched back to the admin account and started up PD. I got the expected list of VMs in the new format and selected the target VM for the upgrade. For the login account that the update requests, I used a domain admin. I should note that all my machines are on a Win2k3 domain. The process continued normally until the end of step 2 at which point the update process threw off an error window saying that the update had failed. Also, the Windows screen that was revealed sure looked like a BSOD. However, I ignored this and just bided my time, and the process began normally after a short time. I also note that I ignored or clicked out of every Windows error, activation error, and hardware update request. Likewise, at the end of steps 3 and 4, the Parallels update engine kicked off the same bogus error message that the update failed. I clicked through these messages and waited until the install process kicked back in. Those messages are bogus, and worthy of being ignored. I note here that the only one of these that occurred in my Vista upgrade was at the very last step. In that case, when I clicked through it was obvious that the guest OS was in the process of coming up. At the end of the upgrade, after Parallels tools installed, the machine rebooted and came up normally. After clearing through the various start up applications on this machine (Symantec AV, a backup utility, etc.) I did the Windows XP activation. I also noted that the MS Office apps also wanted to be reactivated. This seems to have gone without a hitch over the Internet. I should observe that the host is a 20" iMac Intel CoreDuo with 2GB RAM circa 2006. The guest OS is a Windows XP Pro with SP3 installed. So far, all of the host OS's devices appear functional. I can easily see how someone who took to heart the stupid error messages that the installer kicked off at the end of steps 2, 3, & 4 would get frustrated and perhaps quit the upgrade. Because I'd seen this window at the end of my Vista upgrade, I just ignored them. I have to assume that killing the upgrade process at one of these steps would damage the image file. Of course, it is early in actually using this converted VM; and I may see some of the issues that others have with the guest OS wanting to be reactivated again and again. But so far so good again. Lucky me. Whether or not the steps of using the root account to do the PDv4 update or a domain admin account to do the VM update actually helped, I do not know. I can also mention that on my other (laptop) machine where the guest OS was Vista, I did not use the superuser for the update, but I did use a domain account to run the VM upgrade. If anything collapses, I'll post the news.