Symptoms
Dynamic resolution doesn't work or Coherence doesn't work on a Windows 8.1 Virtual Machine.
Resolution
To update the display driver:
Press Cmd + R, enter devmgmt.msc and hit Enter, Device Manager window will pop up.
Expand Display adapters item.
Right-click on Microsoft Basic display and select Update Driver Software... from the menu.
Click on Browse my computer for driver software, then select Let me pick from a list of device drivers on my computer.
Click Have disk... button. Click on Browse... and navigate to C:\Program Files\Parallels\Parallels Tools\Drivers\prl_dd (or C:\Program Files (x86)\Parallels\Parallels Tools\Drivers\prl_dd for 64-bit Windows edition, select prl_dd.inf file and click OK. Then click Next and confirm driver installation.
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