I'm posting this to help anyone else who runs into this issue. I just got finished chatting with Parallels tech support and they stated that there is a 256MB max for XP VMs even though the configuration settings allow you to specify up to 1GB. They also stated that this was a native limitation in XP, but I'm pretty sure that isn't true. Either way, if you want to use more than 256MB, you have to upgrade above Windows XP. Parallels should really update their documentation to explain this limitation in XP VMs, as using more than 256MB was one of my top reasons for upgrading to Parallels Desktop 7. Luckily the performance improvements are still good enough to keep me happy. I guess it's finally time to update Windows...
Same Issue I also upgraded to Parallels 7 and found the limitation. Should have purchased that copy of Windows 7 digital download. Will that upgrade my copy of Windows XP? I don't want to have to download the other software...took almost an entire day.
Yes, you can use to upgrade XP, in fact, you can buy a cheaper upgrade license instead of the full Win7.
