Unable to test site using Visual Studio or Visual Developer with files on HOST

I've tried everything I can find on the net about trying to test a site locally in a Parallels VM with content on the Host. Nothing works. I've tried using the caspol.exe command several times and changed my drive mappings so many times I can't even tell you. When I look at the page in IE I get the following:

Server Error in '/' Application.
--------------------------------------------------------------------------------
Configuration Error
Description: An error occurred during the processing of a configuration file required to service this request. Please review the specific error details below and modify your configuration file appropriately.

Parser Error Message: An error occurred loading a configuration file: Failed to start monitoring changes to 'X:\detoxstrategy'.
Source Error:

[No relevant source lines]

Source File: X:\detoxstrategy\web.config Line: 0

As I said, I've tried every type of mapping of the drive letters, no directory and just a letter, long names, short names, etc, etc. and nothing works. I've tried hitting the directory over SMB and that fails - actually I can't connect to the HOST with SMB. I've got the site config setup to run with Virtual Path /, dynamic port False, Port 8080 (using the built in little servlet). This is driving me nuts!

The only solution so far is to copy the site into a folder IN the VM and do it there - this works fine. But I need to be able to get at the code in both the Mac and the XP VM, preferably without starting the VM every time.

Any help is greatly appreciated on this. I have no idea what else to try.