I had a messed up Windows User Profile (Home being \Windows\system32\config\systemprofile rather than \Users\myname). I brought over another Windows 7 VM from a system that was still running Parallels 7 and the Parallels 8 VM upgrading process messed up the User Profile of that one as well. So there is some problem with the upgrade process. Anyway, I did find a solution. 1. Run msconfig and set the Boot procedure to be "Safe Boot". Reboot the VM. 2. Open a command line and execute "net user Administrator /active:yes". 3. Run regedit and find HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\WindowsNT\CurrentVersion\ProfileList. There will be several hashed keys. Find the one which has ProfileImagePath being the path to the system profile and change it to the correct path under c:\Users. 4. Run msconfig again and set back to the normal boot. Not the cleanest fix in the world, but it now all works, as far as I can tell.
