While this is essentially the same way as protection was in XP, the folder with the protected directories\files is finicky about showing up, which is why it took me an extra day to find it. But it works fine when manually typing in the folder through run :) .
Step 1: in explorer go into Tools\Folder Options and make it so it'll show hidden and protected files.
Step2: Goto Start\Run and type in %windir%\system32\restore (after this it's the same as XP)
Step3: right click on filelist.xml and goto it's properties and uncheck read only.
Step4: right click on filelist.xml again and open with notepad.
Step5: You'll see a big list of folders and files here. To remove a file or folder from the graces of windows file protection just ad this:
Files-
<PCHealthProtect>
<VERSION>1.0</VERSION>
<DEFTYPE>E</DEFTYPE>
<FILES>
<Exclude>
<REC>%windir%\foldername\filename.xxx</REC>
</Exclude>
Folders-
<DIRECTORIES>
<Exclude>
<REC>%windir%\foldername</REC>
</Exclude>
*you can ad %windir% itself but it'll only effect %windir% itself not the other folders in it's tree*
After that save it and protection on that file or folder will be gone. But that doesn't mean windows won't still replace edited files. So onto the 2nd part of this how-to.
Step1: Go into %windir%\system32\dllcache and delete the entire contents of the folder, but not the folder itself. Remember if you want a back-up just make a copy of the original system file before editing it.
Step2: Longhorn ad's a new layer to windows file protection in the form of back-up mui's, though not all mui's are back-up's enough are to make it irritating at times. So before you edit a system file do a search for filename.* to make sure their isn't a .mui back-up for it, but be careful their are .mui's with the same name as a file but aren't back-up's so check the file sizes against each other, if they're the same size then the .mui is a back-up if not then it just shares the name.