I had been thinking about upgrading to Windows 7 for sometime, and after my Raid array failed I wasn't forced to but it happened to be perfect timing.
Instead of waiting till my replacement drive arrived, I installed Windows 7 on a different drive temporarily.
After I received my new drive, I setup my array again and installed Windows 7 once again without a hitch. After installing all of my programs, games, etc. I started to notice both the User folder and Documents & Settings folders were both identical and were being updated simultaniously.
I know I didn't properly remove the old installation, but I've never seen Windows do this before. Very Odd. I've formatted the other drive and everything is good now, but I thought it was odd and wondered if it was a bug or a known issue.
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I have the Windows 7 64bit FULL version and I find my system has both the User folders and the c:\Documents & Settings folder. However the c:\Documents & Settings folder is not accessible so I can not see what is inside it.
I would not loose any sleep over the simultaneous updating you are seeing. Think of it as an automatic backup service.