It really seems that this is the case....am I wrong? Or an I not understanding something about Windows 7 search and just don't know how to properly use it?
And as far as I can tell Agent Ransack doesn't use an index...how is this possible?
Just to confirm your suspicion Agent Ransack does not use indexes there's actually a KB article on indexing (although for the bigger brother FileLocator Pro it's still valid):
Whether Agent Ransack performs better is down to the type of searching you're doing and the type of documents you're searching through. Windows Search normally does a good job of indexing Office type documents (e.g. Word, PDF, Excel etc) and if you're searching for a whole word the speed of indexed search is MUCH faster than a non-indexed search product like Agent Ransack, especially if you are searching the whole drive.
Where Agent Ransack will beat indexed search is on file types not indexed (or files not YET indexed), which quite often includes code files, logs etc. Also, non-indexed search works well for partial matches especially when the match isn't at the start of the word boundary, e.g. searching for 'companyname' in an email address like firstname.lastname@example.org (not to mention other features like print preview and export). Then you have all the security issues of indexes containing sensitive data that isn't easily controlled.
Personally, I recommend indexed search to my non-technical friends and family, who generally have no idea where things are saved, and Agent Ransack to tech-minded friends.
One final note, if you mainly just search by file name lots of people rave about a free indexed based tool called Everything by Void Tools.
Or an I not understanding something about Windows 7 search and just don't know how to properly use it?
Assuming you have indexed all the locations that you want to search, I find the search index to be quite useful. However, I have seen cases where it just fails to find files even when the index is up to date and the file is in an indexed location.
See here for instructions for Vista/Windows 7 to add locations to the index.
Remember that the Windows Search Index contains meta information and file contents information as well, so if you search for "xyz", you might get a file called "abc" authored by "xyz".
Windows 7 Indexing should work perfect and provide the results you are looking for in a reasonable time, if I look for "Test" it shows me the folders and files I used for testing things in under a second.
If your performance is bad then you should reduce the locations that are being indexed and deselect the file types that you don't want to be indexed, this could need a bit of organization if you store things you do and don't want to serach together. It's like comparing a big pile of trash with a super market, where would you find anything quick?
If your results are bad then there are locations that are probably not being indexed or important file types that are deselected, this should not be an issue at first unless you are working outside the folders where you are supposed to be working in.
Microsoft provides you with C:\Users\Username and shortcuts to it and it's contents so that you don't have to go all the way to C:\Whatever and place things there. Why should C:\Intel, C:\Program Files\VLC or C:\Windows be indexed anyway?
If you adjust your question then I can produce a more specific answer,
check the comment to your question for that.
It's not your imagination. I discovered Agent Ransack about 2 years ago and never looked back. Windows Search, to me, has been hopelessly broken since going to Windows 7. It fails to find files and the user interface is just plain clumsy.
When people complain that Windows search fails to find files, MS always has the same suite of useless answers: "You must have turned off certain file types. Your indexing must not be up to date". Nonsense. Everybody who has struggled with Windows Search knows this isn't the problem. It can't find JPGs, it can't find .cpp, movie files, text files, you name it. It has nothing to do with disabling types. It can't find files that have been on my drive for months. It just plain doesn't work.
In contrast, I never have to do anything, configure anything, or worry about anything when I use Agent Ransack.
Honestly, something as simple and basic as search for files? How could they break it and turn it into such a complicated problem?
The old XP file/contents search function on the Start Menu was so much simpler and more intuitive. They should have just left it alone.