Windows 7 has and Administrator privilege bug. Even if you are the administrator, you are not. Some folders you cannot share files from. Impossile to remove or change security. Even if you modify security, other parts of the operating system do not recognize what you did.
Install off the root directory c:New, c:anything, c:warcraft. Note, this is somehow less safe.
Warcraft III AI - extreme lag. Windows 7 is a poor manager of memor like all the other Windows products except MS-DOS and Windows XP. DO NOT put AI player in your multi-player game. It will freeze the game for like 10 seconds every 15 seconds. This is not a Blizzard bug. The game works fine. This is a 'Microsoft doesn't play well with others' bug. Win7 32, 64, 64 with 32 emulator doesn't matter. Bugged. Stay away from multi-player and AI players in the same match and you'll be fine.