I dual boot and use cfs3 on XP (and most older games) and W7 for new games that take advantage of the memory and DX10+ It really isn't hard to do, and as I only buy nvidia cards, I still have my shine.
As for why, I think it stems from Direct X. It appears CFS3's shine uses shaders, code or something that's only in DX8, and windows 7 only goes backwards compatible to DX9, so everything else works, but the shine gets left out even with an Nvidia card. XP and DX9 do seem to still use all the older DX8 stuff if the game calls for it, so it works. I think it's a similar issue with ATI, where they cut out the older stuff to boost performance.
I do have a question about this though:
Does anyone else dual boot XP and W7 and have a newer generation DX11 Nvidia card? I'd like to upgrade mine to one of the newest for W7, but I've heard something about them having a backwards compatability issue like W7 when it comes to direct x.
Can someone with a new DX11 nvidia card and dual boot verify if CFS3's specular shine works or not?