I'm a new Parallels user. After installation, I went to config, General tab and renamed the VM "Windows 7 64 bit". Then I decided I didn't want that and changed it to "Windows 7", but the Windows Folder icon in the dock still says "Windows 7 64 bit Applications". I can't figure out any way to change it.
Have you tried deselecting "Show Windows application folder in Dock", waiting for it to be removed, then reselecting it? See if this will recreate the folder with the correct name. It is in the emulation's configuration/Options/Application preference pane in case you can't find it.