I too ran into this during the summer. Initially, I was using VSE8.5i with some Patch < 6, then I installed Win7RC (to test before upgrading all my computers) and I still got that message when I updated to VSE8.5iP6. I am about to install Win7 for real (upgrading all my computers), and would like to know if VSE8.5iP8 fixes this very issue when running it on Win7 (i.e. does it then report the status properly in Win7)?