Resolution
1. In the case of Windows Vista, please follow the article How to repair the installation of Windows Vista:2. The Windows XP installation CD which you use for repair, must be of the same version and service pack as guest OS installed in the virtual machine, otherwise you may corrupt your system. Please read the article http://kb.parallels.com/en/5446 How to integrate (slipstream) Windows XP Service Pack 3 in installation CD.
For Windows XP virtual machine that uses a virtual hard disk:
1. Open the configuration of the virtual machine.
2. Click the CD/DVD-ROM to open its settings.
3. Make sure that the "emulation" is set to "Use CD / DVD-ROM".
4. Click the "Options" on the left side of the Configuration Editor.
5. Choose the "Boot" and then set the boot sequence to CD-ROM, Hard Disk, floppy.
6. Click OK to close the Configuration Editor.
7. Insert the installation disk in the Windows XP CD/DVD drive in your Mac.
8. Start the virtual machine.
9. Windows should ask you to press any key to boot from the CD - click in the window of the VM to capture the keyboard input and press any key.
10. The configuration of Windows must start the Setup process, wait until it is fully loads and then press Enter (Return).
11. Press F8 (or Fn + F8 keys on the Macbook) to accept the license agreement for Windows.
12. Now Windows should scan your VM to install Windows - wait until the end and choose to repair the existing installation.
13. Wait until the end of the repair.
14. Try restarting Windows. Reinstall Parallels Tools.
For the virtual machine that uses the Boot Camp partition as a hard disk (Parallels Desktop for Mac only):
1. Run Macintosh HD - Applications - Utilities - Boot Camp Assistant.
2. Select "Start the installation of Windows."
3. Insert the disc to install Windows in the CD / DVD on your Mac and restart your Mac.
4. Once you are prompted, press any key to boot from the CD of Windows.
5. The configuration of Windows will start loading, wait until it is fully charged and then press Enter (Return).
6. Press F8 to accept the license agreement for Windows.
7. Now Windows should scan your VM to install Windows - wait until the end and choose to repair the existing installation.
8. Wait until the end of the repair.
9. Try restarting Windows. Re-install Parallels Tools.