Folders outside of program files and Windows "should" be fine.

Also, be sure you are not mounting your CD as a hard drive.

No go...have tried it in C:\defend and C:\users\Rob\Defend Reloaded.

Have tried several mounting options, usually using the default .\VirtualHD but no luck.

Could it be particular to Win7x64? All folders are forced read-only, although the files in them can be changed at-will.

As I said before, changing permissions didn't work and neither did attrib.exe -r -s

[edit] Can someone else using Win7 check their folder props? maybe I need to reinstall...every single folder is locked as read-only even if the contents are writable

http://support.microsoft.com/kb/256614

Didn't help either.

Going to try and set up a DOS7.1 VM instead

What mounting commands were you using?

I started with the default(always worked before)

When it quit working after a Windows Update I tried a C:\Defend\VirtualHD\DHACK folder(NTFS) no go

Then I formatted a flash drive as FAT16 and tried installing Defend/Dosbox there in portable mode...still no go. From what I can find out, it's a security "feature" from Microsoft's April 13, 2010 update. It marks all folders read-only but doesn't enforce it. When an older program checks for the read-only flag it kicks out an error but you can still write/move/delete the folder.

Exact mounting commands?

Deleted the original copy(from the Gamefest Forgotten Realms Classics CD), redownloaded the game from an abandonware site and everything is working fine. Must have been a scratch on the CD causing a data error.