After a recent MS update, I had a user that ran into issues with a legacy application saving all the documents created into a new Virtual Directory and it effectively broke the application. Windows 7 created a new Virtual Directory in this location: C:\Users\*current logged in user*\AppData\Local\VirtualStore\Program Files (x86)\program name. Even with changing the application to point to the correct folder location, Windows 7 was saving the files in this virtual directory.

To force Windows 7 from placing files to be saved in the Virtual Directory I performed the following steps. Note: You must be a local administrator or logged in as a local administrator on the computer to accomplish this.

-Go to the new Virtual Directory application folder that Windows 7 created, then right click > Properties > Security Tab > Edit and if the Local Computer (Users) account is not listed, then add it and set the permissions to Full Control and save all the way out of the properties.

-Manually copy all of the saved documents or files from the Virtual Directory to the proper location and then rename the folder in the Virtual Directory with something like _old at the end of it to avoid the application from finding it all together.

-From the Windows 7 Start Orb, do a search for Local Security Policy and select it. 

-Expand Local Policies and click on Security Options. On the right pane, scroll all the way to the bottom and you will find a setting called " User Account Control: Virtualize file and registry write failures to per-user locations", double click on that setting and change it to Disabled.

The other way of circumventing this is to completely disable Windows 7 UAC (User Access Control), but that is not recommended.