The impact occurs when a new file is created, updated or deleted. In the case of Aces High, we do a lot of file updates, creations, and deletions. Each time we do that, it has to go through that nasty layer which keeps track of where Vista really puts files, as they are not placed in the folders we want them to be placed in.
The upshot of it is, the game stutters and pauses due to the extra overhead created by that nonsense. Moving the game from the "Program Files" folder results in the game playinf much smoother and it allows you to easily locate your files located in the films, screenshots, cache, settings, and skins folders.
XP is far less of an issue. I would call it negligible in XP w/SP3. I only really ran into it when I started working with a ton of files (over 5,000 audio/video files) making a movie. Once I moved that program out of "Program Files" the encoding sped up by about 15%. Made it worth my while as that encoding took over 48 hours to do.
The problem is severe enough with Vista and Windows 7, we will be changing our default installation path in the next release.