First off, background on me: Using VMC for a while now, with many ripped (VIDEO_TS, not ISO) DVD images of our movies (mostly kid stuff) in the DVD Library. Got a linksys DMA2200 last January, and found, tested, and purchased Vader's Transcoder to send DVD's to the extender. I actually love that I can keep the menus on the main PC, but out on the extender, the 1-button entry to main movie is actually a nice "feature" (based on a limitation of the extender).
I've been slowly testing Win7 to take the plunge and don't want to lose any key capability, such as this one. As a licensed Vader's user, I believe we were able to get all the updates, but I never got the one he released in June/July that solved the Win7 issues. Now, it seems to have disappeared from the web, as well as Vader's presence. I don't know what is going on with OML between MSBob and Vader, but I'll let them work that out.
In the meantime, I came across mikinhos solution as a very basic and lightweight way to stream the VOBs. I went ahead and tried it and it worked for a standard movie. By "worked" I mean the movie played, with the following limitations. Please verify that this is the standard experience for everyone:
1. The first of the main movie plays, and the progress bar indicates ~25 minutes total (likely just the length of the first 1GB VOB). FF/RW does not work, but 30s skip does (albeit slow on mine, but this is completely expected and I'm used to it).
2. Once the end of the ~25 minutes is reached, a slight gap in playback occurs as it moves to the next VOB with the "buffering" indicated. The next scene was definitely the next correct scene of the movie though, so that is verified.
3. Now the progress bar was pegged to the end of the new file, still ~25 minutes but a slightly different total time. Now hitting FF/RW did funny things, and due to lag between hitting buttons and seeing what actually happens, it was difficult to debug/log while being half asleep. Progress bar was still always pegged to the end of the file. I *think* that 30s skip forward *was* actually skipping forward but could not tell from the progress bar, and it was a movie I was not familiar with the scenes. Also seemed to jump between VOBs maybe using FF/RW? Not sure but I suddenly got the beginning of the credits at one point.
All in all, I'm greatly relieved that in upgrading to Win7, I won't be taking this capability away from the family! Getting it working like Vader's used to (one continuous stream, and once pre-buffered, all 30s skip worked) would be gravy. If anyone still following this and the old thread (JackLuminous, perhaps?) has the rar file for Vader's v2.2.2 I would love to try that out.
Mikinho, keep up the great work. If you get the seamless playlist stuff working, I can easily justify with the wife a donation going to your "animal rescue efforts". 
EDIT: Just to note, VMC machine is Vista Home Premium 32 bit, and 7MC is same machine with Win7 32 bit.