Ravi, i did a quick google and came up with it being a Version Cue related problem (possibly), the mentioned solution for a few folks was:
In CS3 go to Edit>Preferences>File Handling and unselect "Enable Version Cue". Then Exit CS3 and restart...
good luck, and yes, downgrade to XP or have a dual boot if Vista is a must.
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back up off my teef, woman!
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