As of this writing, I have yet to confirm the exact nature of the VMware issues. I suspect the VMware Authorization Service bug had something to do with Windows 7's revamped UAC (User Account Control) system. An attempt to bolster system security by requiring the user to confirm certain common functions via a dialog prompt, the nettlesome UAC has been one of the more unpopular features of Vista. In Windows 7, Microsoft has responded to the criticism by suppressing most UAC prompts by default. Because VMware Workstation 6.5 was designed to work seamlessly with the older, more intrusive Vista model, my guess is that Windows 7's attempts to suppress UAC breaks the VMware shell's UAC interaction logic; it's no longer able to traverse the various process privilege levels and speak to its Authorization Service component.
Just how many Vista-compatible applications will break in this manner is anybody's guess. But as a person charged with supporting a UAC-aware software product on Windows, I'm genuinely concerned. Even more disturbing are the unexplained driver compatibility issues. If Windows 7 really is Vista at its core -- as the close similarity of their System process, memory, and performance profiles suggests -- then the fact that Microsoft has still managed to break applications as popular as Daemon Tools and Skype (both have tens of millions of users) is disconcerting and perhaps even alarming. At the very least, it doesn't bode well for Microsoft's promises to make the Vista-to-Windows 7 transition truly seamless.
Lipstick on the pig
So where does this leave us? For starters, we can now say with some certainty that Windows 7 is in fact just a repackaging of Windows Vista -- an "R2" release, to use Microsoft's nomenclature on the Windows Server side of the house. Key processes look and work much like they do under Vista, and preliminary benchmark testing shows that Windows 7 performs right on a par with its predecessor. Frankly, Windows 7 is Vista, at least under the hood; if nothing else, this should translate into excellent backward compatibility with Vista-certified applications and drivers.
Except that it might not. The M3 build of Windows 7 breaks all sorts of things that, frankly, it shouldn't be breaking. Worse still, the suspected source of a major compatibility bump -- the neutered UAC prompts -- is in fact architectural in nature, one of the few truly new features of Windows 7's secure computing stack.
Bottom line: So far, Windows 7 looks and behaves almost exactly like Windows Vista. It performs almost exactly like Vista. And it breaks all sorts of things that used to work just fine under Vista. In other words, Microsoft's follow-up to its most unpopular OS release since Windows Me threatens to deliver zero measurable performance benefits while introducing new and potentially crippling compatibility issues.