The latest version of Parallels allows you to use a Bootcamp partition instead of a VM file to run Windows within MacOS X. This is the configuration the OP is using at the moment. So, if you want to transfer your Bootcamp Windows XP install to a standard Virtual Machine file, you can start your "Bootcamped" Windows in Parallels and run the Transporter agent in there. On the MacOS X side, run the transporter software to extract your Windows from the Bootcamp partition and create a VM file out of it.
This is a very ineficient but very simple way to get rid of bootcamp without having to re-create a Windows image from scratch (inefficient because even though you are effectively simply copying your Windows installation locally from your Bootcamp partition to your MacOS X partition, the Transporter software thinks that it's accessing a remote PC via the network and therefore transfers your entire Windows install out of your Macbook via the network then back in your Macbook again).