I have a Windows 7 virtual machine running on Parallels 10 on my MacBookPro. I lost the password and can't use the Windows 7 reset feature because it asks for a "reset disk." I followed the instructions provided in http://kb.parallels.com/114193 but that article is only written for Parallels7,8, and 9. When I tried it I got the result: "Unable to open new session in this virtual machine. Make sure the latest version of Parallels Tools is installed in this virtual machine and it has finished booting." Is there an update of the article for Parallels 10? Thanks for your advice.
The original installation was a full installation so nothing happened when I clicked on the command to reinstall.
I'm experiencing the exact same problem. I cannot install the Parallels Tools because I cannot login to Windows due to a lost password. I've even tried booting from the virtual disk drive.. to try and install from the prl-tools-win.iso that appears to be loaded in the virtual disk drive... but, it doesn't do anything.. booting from the drive just goes straight to the windows login screen. I am stuck.
There is a third party utility called Reset_Windows_Password which does the trick. You can find it through mediafire.com. Parallels tech support actually reset it for me through a remote session after we exchanged a number of messages back and forth. That should solve your problem.