Perhaps it is just a question of a corrupt preference Jacob should be around with a link to a method of moving the proper files to rest the settings.
Just for curiosity sake you didn't install any new fonts or plug ins or other software or updates or anything else that is diffeent even if it is something that seems insignificant?
Move the prefs out of the way, so Illu creates them from scratch. C:\Users\[You]\AppData\Roaming\Adobe\Adobe Illustrator CS3 Settings
Harron K. Appleman wrote:
Did you upgrade to 64-bit Vista by any chance?
Are your PSD images 16-bit by any chance?
The problem with this scenario is that since Illustrator, any version does not support 16 bit psd files and CS 3 and 4 will place the file anyway but give you a notice that it is placing it as 8 bit. So unless there is something about Vista XP or W7 64 bit that prevents Illustrator fro converting then that is probably not the issue. And though the warning says it flattens it will preserve a transparent background.
So it might be a different issue.