'expanding' disks do not work this way.
An 'expanding' disk in Parallels is a disk that 'expands' the file that is the disk in MacOS so that you can save some disk space on the real hard drive.
As far as the VM is concerned, the disk has a fixed max size, just like a real drive does. Expanding disks do not 'expand' from the point of view of the Guest OS. FAT32 and NTFS assumes (and most other partition types also) that the size of a disk will not change while it is running because real hardware can't change its size. Because of this assumption, you can't change the size of a partition while Windows is running.
Parallels could eventually re-write all of Partition Magic to make their disks resize themselves from the point of view of the guest os, but that will take time.
For now: 'expanding' refers to the Host OS... not the Guest OS (windows)
Last edited: Jun 26, 2007