trying to resize imported bootcamp vm

I have imported a windows 7 virtual machine from a 120GB Boot Camp partition. This has created a 120GB virtual machine. It appears that there is only around 30GB of data on the vm so I am trying to resize the vm to free up hard drive space on the Mac.
Windows lists the c: drive of the vm as using 130GB of 256GB (the physical size of the Mac hard drive). In parallels configuration the vm is also shown as 120GB, all used. When I go to edit the size of the hard drive it shows up as a 465GB expanding disk and I can't get an option to shrink the size of the vm below this 465GB size. I also get an error message stating that the file system on the vm may be damaged, however your knowledge base says this is a known bug and can be iginored.
What is the recomended process to reduce the on disk size of this vm by about 60Gb or so?

Thanks

 

First create a snapshot (go to Virtual Machine under Parallels Desktop menu -> Take a Snapshot....) and then try to resize hard drive using Windows Disk Management:
http://www.howtogeek.com/howto/windows-vista/resize-a-partition-for-free-in-windows-vista/

Hope this helps.