I had the same problem Mixalis described. I was able to get the virtual machine window smaller by doing the same things as Mixalis (moved My Computer to the Desktop and played with various resolutions), but the smaller Window is still much larger than before. (The window went supersized earlier today when I was working in Windows XP and got a message that Parallels suddenly had to close, taking everything with it. When I figured out how to get my VM running again and get Windows XP running again, the window had gone "super sized.")
When I shut down Windows XP and the stop the VM, I have the small Property Page window, just the size I want when I'm working in Mac OS. Before today's problem, when I went from full view back, my WIndows XP window was the same size as my Property View window was and still is.
I've played with various resolutions, and none gives me the small window I'm looking for.
Anyone have an idea what I might have done wrong after my Parallels "crash" this morning, and how I get my small window back? Thanks~