Symptoms
Before starting to work with Parallels Desktop 4.0, you need to update virtual machines from Parallels Desktop version 3.0 to version 4.0. Usually, this process is performed automatically and you are shown pictures displaying new features of Parallels Desktop 4.0:
But sometimes you may receive the following message: "You need to manually continue the upgrade process"

Cause
The most likely cause is that you have the Autostart option disabled or you have more than one user account in WindowsResolution
Click OK and proceed with the updating of the virtual machine. The following scenarios are possible:1. If you see a black screen or the Windows Welcome screen, it means that Windows has not yet started completely. Wait until the startup process finishes.

2. If you see the login screen, it means that you have Autologin disabled or you have several user accounts in Windows guest OS. Select your account and provide your password.

3. Once you have logged in, you may see different error messages or pop-up messages like "Found new hardware" (the list of most wide-spread messages is given at the end of the article).
Attention: Do not restart the virtual machine unlessit is completely upgraded.

3. Once you have logged in, you may see different error messages or pop-up messages like "Found new hardware" (the list of most wide-spread messages is given at the end of the article).
Attention: Do not restart the virtual machine unlessit is completely upgraded.

You should see "Welcome to the Virtual Machine Upgrade Wizard":


4. If you have logged in and waited a few minutes but the Wizard window above did not appear, go to Start -> My Computer -> CD / DVD Rom and double-click it:

Now you should see the Wizard or see the following folder open:

Double-click the Setup.exe icon.
5. If you do not see the file Setup.exe or CD / DVD Rom is not responding, close the My Computer window and open it back 5 minutes later.
If you do not see any changes, from the Parallels Desktop menu at the top of the screen select Device -> CD / DVD Rom -> Connect image and connect the image prl-tools-win.iso (by default it is in the Mac HD -> Library -> Parallels -> Tools directory).
IMPORTANT: If the system asks you to remove the application Kaspersky Internet Security, delete it by selecting "Delete Completely".
Finally, process of installing Parallels Tools should be started. Do not interrupt this process, it will be automatically completed in few minutes.
Below is a list of the most common messages (if you see these messages, please ignore):
# \\.psf <file:///\\.psf> is not accessible
# Mapped network drive is not accessible.
# Found new hardware.
# New hardware is installed. Reboot is required.
# Select new network location
6. If you do not see any progress for a long period of time, move the window of the Wizard and see if there is any dialog window behind it.
If you see "i8042prt.sys is missing" error, click Browse. Go to c:\windows\system32\drivers and point to i8042prt.sys driver.
If you still experience any difficulties with upgrading, please, contact the Parallels Technical support Team. You can:
1. submit a free e-mail support request
http://www.parallels.com/support/desktop/
2. Purchase Phone support at
http://www.parallels.com/store/support/