I have had same problem with this uppercase keyboard thing on my imac useing parallels 5 - 6 and now 7.
The above fix does not work, when i reboot the problem comes back again.
I am useing XP on Snow Leopard and Parallels Desktop 7 upgrade, with imac bluetooth keyboard.
When i reboot it reverts to uppercase, i can then press the key just under the the caps lock twice then i works with lowercase.