Long Filename in VM

I use Carbon Copy Cloner to backup every night, but immediately after upgrading to 4.0 I started getting errors that indicate a too long filename in the VM.

See CCC log below:
05:00:16 cannot send long-named file "/Users/Andre/Documents/Parallels/Microsoft Windows XP.pvm/Microsoft Windows XP (Backup)/Microsoft Windows XP (Backup)/Microsoft Windows XP (Backup)/Microsoft Windows XP (Backup)/Microsoft Windows XP (Backup)/Microsoft Windows XP (Backup)/Microsoft Windows XP (Backup)/Microsoft Windows XP (Backup)/Microsoft Windows XP (Backup)/Microsoft Windows XP (Backup)/Microsoft Windows XP (Backup)/Microsoft Windows XP (Backup)/Microsoft Windows XP (Backup)/Microsoft Windows XP (Backup)/Microsoft Windows XP (Backup)/Microsoft Windows XP (Backup)/Microsoft Windows XP (Backup)/Microsoft Windows XP (Backup)/Microsoft Windows XP (Backup)/Microsoft Windows XP (Backup)/Microsoft Windows XP (Backup)/Microsoft Windows XP (Backup)/Microsoft Windows XP (Backup)/Microsoft Windows XP (Backup)/Microsoft Windows XP (Backup)/Microsoft Windows XP (Backup)/Microsoft Windows XP (Backup)/Microsoft Windows XP (Backup)/Microsoft Windows XP (Backup)/Microsoft Windows XP (Backup)/Microsoft Windows XP (Backup)/Microsoft Windows XP (Backup)/.DS_St" (51)

Is there something wrong with my VM installation or is this long filemane for the VM normal for 4.0 (had no problems with 3.0) ?

My work around at the moment is simply not to backup the VM, but would prefer to include it.

Any suggestions ?
André

 

LongPathTool looks like repeated nested folders caused the path to grow too long.