I can't activate because I am told that the key is valid, but I don't have sufficient access, and if I try to run the Compacter in my OS X host, I get the message "permission denied." I am running an account with administrator priviledges.
BTW - you can install VM Compactor directly into Windows guest OS. But in this case you should download Windows EXE package ofcourse.
I'm having a similar problem. I am logged in as the same user (my only user actually) who installed parallels and the compactor. It gives the error: "The activation key is valid, but error was occurred while saving license file. Please make sure you have proper permissions to activate a product!"
Ok got it working. For some reason the installer on OS X made the owner/group 501/admin. I did this at terminal to make it work: sudo chown <my_user_name>:<my_user_group> Parallels-VM-Compactor Then it activated. I ran Windows XP w/ the ISO and during booting my machine rebooted...not the VM, it never got into XP, but my MacbookPro rebooted, no kernel panic, just a hard boot. I reboot and load up XP and it looks fine, try to run the ISO and it tells me it's not activated. So I look in the Parallels-VM-Compactor folder and again, all the files inside are owned by 501:admin. So I disconnect the virtual CD in XP, shut down Parallels and chown those files cd /Applications/Parallels-VM-Compactor sudo chown <my_user_name>:<my_user_group> * Then I run the activator and reboot XP and it all works.