I know it can be done by reinstalling Parallels, but, can you do it without having to reinstall Windows XP? I made a 20 GB hard drive (expanding) which is way more than I need. Takes longer to bring XP up, longer to back up, etc. It sems like there should be a fairly easy way to do this, but I would rather not have to reinstall Windows as I'd have to call or whatever to get it reauthorized. Plus, if I have to reinstall Parallels, I'd have to reload Quicken, Norton, etc. Not complaining, mind you - just looking to see if there is an easier way to do this. By the way, Parallels Team, if you're listening, you have one great product. Keep it up.
Why would it take longer to back up an expanding 20g file that had only a few gig of data than a smaller one with the same data? The OSX files would be the same size and should take the same time to back up. What is the evidence that the larger file increases boot time? Windows boot slows down with time and accumulated clutter and fragmentation, but disk size has nothing to do with it. I suspect your problems lie elsewhere. You can run the Parallels compressor to shrink your physical hdd file, and the difference between your current 20 and a smaller (say 10) g file will only be the initial size of the NTFS master directory and I doubt that would have any practical effect.