As you probably know, some folders enjoy special protection under Win7. This includes the Program Folders and the Windows folder (for example). If a process is running with normal user-rights (default) it can see most of the content just fine, but if it copies something there it isn't actually copied to that folder. If you copy executables there, they will be placed there though (after UAC is assured I meant to do that).
This is especially problematic if you don't know about it and keep wondering why the hell a program can't find a configuration file (or similar) that according to XYplorer is clearly in the same folder. It's even worse when you have to handle Services (which automatically run with elevated rights) and their files with no real output for what's the problem. Took me ages to figure this out the first time around
A small example (with nice pictures

) to make the problem clear: I've compiled a recent version of the open source game called OpenTTD and wanted to copy this to my Program Files folder. It consists of an executable and quite a few other files that surround it and are required to be in sub-folders beside the exe. Obviously I drag the folder containing the executable and the other folders over to my Program Files folder (right-drag, "copy here as", entering "OpenTTD Test"). Now I get asked by UAC for permission to copy to the folder "OpenTTD Test", I confirm. Seconds later I get the question that "OpenTTD Test" doesn't exist and if I want to create it, again I confirm. Everything seems fine now, XYplorer shows me this:
XYplorer folder view.jpg
Trying to start the game causes it to complain about missing language files though, which clearly seem to be there. Having a look in Explorer reveals the problem:
Explorer View.jpg
Things get even weirder when you delete that folder. First UAC asks for confirmation (which I give) and deletion seems to succeed, but now all files but the exe are still there (because they are somewhere else

), deleting the folder again (obviously no confirmation this time) causes them to disappear.
EDIT: Forgot to mention, the actual location of the files is here:
C:\Users\[username]\AppData\Local\VirtualStore\Program Files\
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