After updating Parallels Desktop to version 16.1.0 my Mac OS X 10.8.5 guest OS would only display 1024x786 video resolution. Uninstalling and re-installing Parallels Tools in the guest did not help. System Profiler lists a display card with 3MB memory (even though it is set up as having 128). Reverting to Parallels Desktop 16.0.1 fixed the issue.
