Which version of Windows 7 do you have? There's 6 different ones: Home Premium, Professional, and Ultimate for both 32 & 64 bit.
I've now got Win7 Home Premium 64 bit, so I might be able to help.
Have you tried setting the security permissions for the ASCII folder and all its subfolders? Maybe the attributes of the ASCII folder or its subfolders got set to Read Only?
I'm hardly an expert here, having had Win7 for less than a month, so I don't know what else it could be.