I had similar experiences with 32 bit Win 7 as the OP.
I had to rebuild my laptop recently as well and gave the 7801 build a spin. Virtual Clone Drive would not work for me either. Also, Daemon Tools would not finish installing.
The installer would get part of the way through and tell me to reboot. Once I rebooted the installer did not restart manually so I kicked it off myself. The same thing happened, the installer got to the same spot during the install and told me I needed to reboot.
Are there any other quality, free vista compatible iso mounting utils out there?
If you mount directories as an iso to play movies, Win 7 isn't ready for testing yet (unsurprisingly) unless someone finds another iso mounting app...
On the plus side, it was quite stable. No BSODs for the couple of days I was running it.
It didn't seem sluggish or slow... Not anymore than Vista is normally on my laptop (Dell D620 3gb ram) anyhow.