In full screen mode reducing screen resolution reduces screen size

When in full screen mode, reducing the screen resolution of Windows XP under Parallels 6 on a new iMac results in the screen size become smaller, i.e. black borders, rather than the lower resolution screen filling up the entire screen.

The purpose of doing this is so that our finance director can make the Windows icons larger so that he can see them.

Environment: imac I7 2.9GHz quad processor w 8GB ram, os 10.6.x, parallels 6.x, windows xp sp3.

Any suggestions/tips are greatly appreciated.