Parallels question about disk formatting

I am about to install Parallels on Mountain Lion for the use of Widows 7 and various developer tools like Visual Studio 2010 Professional and SQL Server 2008.  But I am making that change (from VMWare Fusion) so I can have Time Machine make incremental backups.

Can I install Parallels to use the disk format of iOS Extended?  I need that format in order for the incremental to work properly.

My question is:

Will Windows 7 and my various MS tools function on a non-NTFS non-FAT32 format?

Also, I currently have DiskVault enabled, which means I use whole disk encryption.

Thanks!
newbiewebSr. Software EngineerAsked:
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XaelianCommented:
You can use Time machine to use incremental backups. You need to configure this in the General settings of the virtual machine.

Also your Windows 7 will work on the os x extended format. You don't need to worry about ntfs,fat with parallels. Windows and your MS tools will work like a charm with Parallels. Parallels or VMWare fusion just make sure that you can run vm's of other OS'es and not be bound with NTFS, FAT, os x extended.
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newbiewebSr. Software EngineerAuthor Commented:
Thanks.
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