My Win7 Ultimate PC at work acts the same as the OP. So, I guess there may have been an “enhancement” or “undocumented feature” discovered.
Joe
I ‘appear’ to have discovered that I cannot copy all of the contents of an installation disk to a flash drive under Win 7. This may be a matter of permissions, and I say ‘appear’ because I haven’t gone back to my Vista machine, where I was able to do it previously, to test it. This is important, because one convenient way of installing Win 7 on a netbook is to use a flash drive with the contents of the installation disk.