Arkose: Windows isn't doing this. That folder was most likely being used by an active process. Many programs adjust attributes and/or security permissions to suit their needs and will simply re-apply them if they are somehow changed while the program is running. The same goes for deleting temporary files or folders a program uses while it is running (it will keep creating new copies every time you delete one). Files and folders that have actual modification restrictions applied (rather than simply being "stickied" by an active process) will prompt for administrator elevation as you would expect.
I don't use 7 or Vista, but have they gotten around to giving you a way of checking to see if a file is in use? I know that both Linux and FreeBSD have provided that functionality as a part of the OS for seemingly forever, but Windows, at least going up to XP seems to require you to download a 3rd party app to do it.
Really annoying when you're wanting to dismount a volume and Windows doesn't feel like telling you why it's still locked. And without knowing why it's locked you don't have much of a chance of dealing with it or making a reasonable decision.
PhoenixWright: XP Mode really saved me when I had to use a specific version of VPN software for work, and the network drivers wouldn't work with Windows 7. As stated it is a seamless usage of VirtualPC, but MS made it very convenient to use, no having to install XP or anything like that. Neat stuff.
I'm a bit curious about this. I take it that it's more involved than just exposing a set of libraries for software designed for older versions of Windows. Seems to me to be a bit of overkill if that's the case, unless there's something I'm missing.