Trying to add another VM (Windows 7). How much free space is needed?

Hi!

Could you help this clueless newbie? I currently have Windows XP on Parallels on my Macbook Pro (Mid 2009, 2.26 GHz Intel Core 2 Duo, 4 GB 1067 MHz DDR3, OS 10.7.4). I have a Windows 7 DVD (full version, not update), using which I'd like to create another VM. I need to keep the XP VM. I followed the installation steps shown on this site, but my Parallels keeps telling me the free space I have is too small for this installation. I tried to find out how much free space I need for this to no avail. My Mac says it has 85.57 GB out of 159.18GB available.

To achieve what I am trying to do, could anyone kindly teach me the steps?

TIA