Symptoms

I am unable to start the virtual machine. Virtual machine fails to start with the pop-up error message: "The virtual machine cannot be started due to a critical error: Problem ID: 68".

Logs

If you find in vm.log or in parallels.log in Console these strings, follow the resolution:

    07-12 13:34:49.103 F /disp:1553:b2cf/ Handshake timeout( 60 sec )  elapsed for vm Windows XP {5fde08e1-2c29-40d7-9c1b-c69729cc887f}
    07-12 13:34:49.103 W /disp:1553:b2cf/ UnregisterVm succeeded: uuid = {5fde08e1-2c29-40d7-9c1b-c69729cc887f}, name = 'Windows XP'
    07-12 13:34:49.104 F /disp:1553:b2cf/ CDspVmProcessMonitor: send error 0x80000068 PRL_ERR_VM_PROCESS_IS_NOT_STARTED
    07-12 13:34:49.104 F /gui:2789:c07/ localhost: received event PET_DSP_EVT_VM_STOPPED, code = [100008]
    07-12 13:34:49.105 F /gui:2789:c07/ localhost: received result for [DspCmdVmStart]. RC = [PRL_ERR_VM_PROCESS_IS_NOT_STARTED]

Cause

The root cause of the issue is under investigation.

Workaround #1

Possible steps to resolve the issue:

1. Restart the Virtual Machine.
2. Reboot the Mac
3. Uninstall any antivirus/firewall/other security software
4. Create a new user account and check with it.

Workaround #2

Create new virtual machine and connect existing hard drive.