Can't install Parallels Tools with mac host 26.5.2 and mac guest vm 26.5.2

I recently upgraded to Parallels 26.4.0 on my M1 Macbook Pro.
My host OS is Tahoe 26.5.2 - the latest version. I am unable to install Parallels Tools into my guest vm (Mac OS 26.5.2) - also latest OS version. I have tried all kinds of ways including the normal Install Parallels Tools menu selection. The installation process seems to work and I get an installation window that shows a progress bar and indicates success but it doesn't work. I have tried various manual installation methods including some that use the Terminal to do the install, but I always get the same result.
After the install and reboot, I continue to see a VM menu item that says - Install Parallels Tools - rather that Re-install Parallels Tools.
More importantly I am unable to share files between the guest vm and the host, as was normal on my previous versions of Parallels.
I am beginning to regret upgrading to the latest version of Parallels. I never expected that the simplest operations with the old Parallels would now become a challenge.
I have searched the Parallels forums for help, but I don't see any final fixes. I do see that others have had similar problems and some acknowledgement that Parallels is aware of the issues.
Does anyone have a fix for this issue so that I can begin sharing files between my mac host and my mac guest vm?