How to reclaim hdd space after compacting VHD in hyper-v

I have a virtual machine installed on Windows Server 2008 using Hyper-V.  The VM is using Windows 7 as its OS.  I had originally set the size of the dynamic disk to 40 GB but soon learned that wasn't large enough and expanded it to 110 GB.

Now I an no longer running the VM and need to reclaim some of that space while keeping the VM intact.  I have run the compacting wizard, and it says the disk is now 24 GB with a maximum size of 110 GB.   Yet all of that space is still allocated for the VM's use.  How do I reclaim the empty space?

I have tried to go into the VM and shrink the current volume, but it says I don't have enough space to do so.

I appreciate any suggesions as I really need to reclaim some of that hdd space.

Thanks!