I'm trying to rip CDs through a Windows software in Parallels. However, it says there isn't sufficient space to rip the CD, even when I do I enough space in my Mac. So I learned that by default ripped file is stored somewhere on your C drive, or windows install drive. Is there a way to change that?
That's completely down to whatever program you are using to do this. If it has settings allowing you to specify it's 'working' directory, or where it's temporary files are stored, then you may be able to point these to the Mac drive. However many such programs will not allow these to be on 'network' drives, and the Mac drive from inside the Windows VM, is seen as a network drive.
As long as I have 2 GB (since CDs usually are less than 1GB, 2GB will be more than enough) somewhere within Windows and save it to there, it should work. So what would be the way to make sure it's directed towards a space with at least 2 GB or what would be the way to expand the place wherever it is being directed to?
My answer still applies. This is down totally to the settings of the program you are using to do this. The program will have settings to say 'where' it stores it's work files. These settings are what you have to change to put the files where you want.