Symptoms
At the attempt to reach shared folders or user profile folder (My Documents, My Music, etc) within the Windows guest OS the network error "Windows cannot access \\.psf" appears:
Cause
This issue usually arise when you upgrade guest Windows XP to Vista or 7 or Vista to Windows 7. Network links to Shared folders in this case break down. Simple Parallels Tools reinstallation will not help.
Resolution
1. Please make sure that you changed the type of guest OS from XP/Vista to the current version of Windows in Virtual Machine configuration.
2. Disable Shared Folders in configuration of Virtual Machine.
3. Start Virtual Machine and from Control Panel > Programs remove Parallels Tools.
4. Reboot Windows and install Parallels Tools back.
5. Enable Shared Folders in the configuration of your Virtual Machine.