Time Machine and Parallels

TM will not backup the Parallels folder if you add it to the Exclude list. That is correct. If you do not then TM will backup the folder in its entirety whenever the contents have changed, which is each time you use Parallels. Since Parallels maintains a pseudo-disk that is a disc image TM is unable to backup only changed files on the image, but will back up the entire disc image.

If you want a simple Windows backup then you will need to do that separately from within Windows and exclude the Parallels folder from your TM backup.

This particular problem with using TM and VM software such as Fusion or Parallels has been around since Leopard's release. I'm surprised the support at Parallels was unable to "grasp" the problem. They should be fully aware. Perhaps the newbie was the person you spoke with!

Unfortunately, there's really no simple solution to the problem. Either you live with these periodically huge backups with TM or you look for a separate Windows solution.

A possible solution, one that I use, is to only backup once per day or once per week using other backup software that overwrites changed files instead of archiving all older versions. You lose the "back in time" feature of TM but use much less disk space on the backup drive. If you wish to ponder this alternative here are some alternative backup utilities:

Backup Software Recommendations

1. Retrospect Desktop (Commercial)
2. Synchronize! Pro X (Commercial)
3. Synk (Backup, Standard, or Pro)
4. Deja Vu (Shareware)
5. Carbon Copy Cloner (Donationware)
6. SuperDuper! (Commercial)
7. Intego Personal Backup (Commercial)
8. Data Backup (Commercial)
9. SilverKeeper 2.0 (Freeware)
10. MimMac (Commercial)
11. Tri-Backup (Commercial)

Visit The XLab FAQs and read the FAQ on backup and restore. Also read How to Back Up and Restore Your Files.

You can use TM with Parallels. Please don't misunderstand. However, doing so has consequences for your backup strategy. Personally I do not use TM precisely because I cannot control its operation sufficiently to accommodate my situation. TM is a "simple" backup system that has limited user control. Nevertheless it's not that difficult a situation to handle. If you use TM then you have only two options: include Parallels or Fusion; or, exclude them. Or you can use a third-party utility such as TimeMachiineEdit to modify the backup period so TM does not backup so frequently. Or you can use some other backup software. Or you can simply backup Windows independently as you've now done.

In no way do I see you were misinformed a the Apple Store.

When I faced this similar situation, I simply set up document sharing in Parallels to share with my home folder. Then all my files were saved separately into my documents folder and outside of the virtual machine. This meant that I could exclude the actual Parallels image from Time Machine but include all of the documents I work on in there.

So if my system were to fail all I would have lost is my Windows installation but not the work files held within it. Seemed to be the best option for me.

I thought that Parallels Desktop for Mac V4 stored its hard disk file as a sparse bundle, so that Time Machine could only back up the actually-changed portions of the "windows disk", rather than the entire hard disk file.

Is this the case, or not?

It is not the case. If the pseudo-disk changes TM backs up the entire disk each time it changes. You should exclude the pseudo-disk from TM backups or you will quickly run out of storage space on your backup drive.