SYWink,
I stumbled across your post in looking for answers to the Windows 7 Briefcase. What I was able to find as an answer (at least for my situation) was that the necessary menu bar for the briefcase was hidden by default in Win7. The standard Windows 7 folder view doesn't have the familiar File, Edit, View, etc. You can re-enable the normal menu bar by clicking on Organize-Layout-Menu Bar. Once this is enabled you will also see the familiar "Briefcase" option in that menu bar when you're in your Briefcase. Under Briefcase you should see the "Split From Original" option.
I have not yet looked into the sync speed, so I have no insight as to that. However, as for the briefcase magically turning into a regular folder, I have actually seen that on just about every Microsoft OS, I've never found a reason for it.
I hope this helps you, at least a little.
Toledohitman