emacs -Q exhibits the same behaviour. 

Hehe, yeah you're right. I don't have the answer to that question about why it does not happen to you. Bug 9717 seemed to be very close which is why I responded to it rather than opening a new ticket. I suppose what I should have said is "It definitely seems to be related to the only the non-Cygwin Windows version of Emacs." =D

Sorry, I don't have the answers the rest of your questions. It was a loner for work. I can try it out on another Windows 7 computer later, though. If I get the same results I'll write back.