Parallels 8 corrupted phantom disk insisting on being target of XP SP3 update

I read on a KB article here about a known issue with a mystery unsupported volume appearing when using Parallels desktop for Mac v8. It has appeared as drive "G:" (showing 0 size and 0 available space) in my Windows XP SP2 guest VM. My Drive "C:" has plenty of available space (> 8 GB) . However, I'm trying to have the SP3 update installed and after preparations, it ultimately reports to me that there isn't enough space on my G: drive.
I have NO IDEA why its trying to go there, how to make G: go away or how to instruct the upgrade to exclusively use C: instead.

Any clues would be appreciated!

 

BTW, this is the KB article I was trying to remember in my original message:
http://kb.parallels.com/en/113653 - ERROR: Unable to resize the last volume

I get that after shutdown of the VM. and I believe that's where my 0 byte size drive "G:" is coming from. Still need to know how to get rid of it or dismount it and/or get the Service pack to installer to ignore it.

Thanks