Updated to newest build of Parallels Desktop 3 for Mac. Host OS (WinXP SP2) said it needed to update Parallels Tools - this keeps bombing out saying it can't access registry.
Looks like registry corruption Try to remove Parallels Desktop first as described in http://kb.parallels.com/en/4841
Not sure there'd be a registry problem with only two applications running on a relatively fresh Windows install. I removed Parallels Tools - tried to re-install - no go. Going back to an old snapshot - even though they said they needed updating the tools seem to be working so I'll leave them as the old install.