The problem you're running into is that \Application Data is an NTFS junction point to \AppData\Roaming. Microsoft changed the \Application Data directory's path when Vista came out. The junction point was provided for compatibility purposes.
When you extract the archive, completely exclude the Application Data directory and you should be fine. If, after you've extracted the archive, you find that some programs don't work, you can recreate the \Application Data link by using the
The reason it got this way in the first place is that Windows has had historically poor support for symlinks -- something which *nix-based operating systems have had for decades. Even though NTFS supported them since Windows 2000, they were never used until Vista came out, and this explains why Explorer is not handling them properly when 7-Zip extracts the archive.
As the old joke goes, Microsoft doesn't know how to spell SYMLIN~1.lnk