Ok, your symptoms are close enough to mine to say that this is a systemic and not a random problem affecting only me. I would be careful of running anything in that state (as I have seen other problems that might corrupt things) and keep your backup of your VM before you upgraded.
I upgraded by the automatic upgrade from the program. Is that how you upgraded? What version did you upgrade from?
If you run your old VM and not allow Parallels Tools to update, does everything work correctly?
If it does, then that just about nails it that we both got hit with the same problem (bug?).
Who knows how many others are out there pulling their hair out. Where there is smoke, there is fire!
Now if we can just get some Parallels input for things to try to narrow it down further.
Regards,
Dennis