Yes, it is from Parallels 4.0. I tried using the converter, and there are a couple of problems:
I have about 1 GB of disk space left (formatted as FAT32), so there is not enough space on the hard drive to convert the VM to a VM Fusion file. I can use an external drive, but only if the Parallels Tools remain installed.
When converting (using the external drive as the target for the new file), it stops at 2% and gives the message that the coversion has failed, possibly due to insufficient disk space.
I tried freeing up some diskspace but it seems that most of the disk is taken up by the XP OS.
Any suggestions?