Your workaround makes me think that the problem is related to how compressed files are handled on your system.
finger pointing at non-related events (or programs in this case) seems to be the norm (oh no, it's not us).
it has been clearly stated that preexisting blinds would not load after updating to WB7. this seems to only leave two options for the problems encountered. 1. impulse, which automatically updates itself (and recently crapped out the MS window automatic update process) or 2. WB7.
I visited impulse recently, to just looked around and was slightly annoyed that impulse updated itself without my approval. next thing "boom" my OS updates failed to load after that. looking around the message boards there were indications that the problem was with windowblinds and that updating from 6 to 7 corrected the problem. okay, I know it's still in beta but I figured getting my updates for my os is important so...
back to impulse to download wb7 (slick interface btw, I like it but miss the scroll bars in the presentations) and again impulse updated itself (yes, and again without permission). but then again the problem with my os updates were corrected.
now this thread has me thinking that the problem may not be with wb7 but with impulse. impulse updates and the ms updates crap out. upload wb7, to which impulse updates itself again and the problem with the os updates are corrected. my reasoning towards impulse is that people who were complaining were not all using wb but colors and other stardock programs. the commonality was updating through impulse.
my suggestion would be to visit the impulse site and see if impulse updates and if it does, does it correct the problem? you may even want to reinstall wb7 just to be safe???