Known Problem
Funny, when I first got my Win7 computer, Print Screen from CFS3 to Paint worked as normal.
I updated my video card and power supply, and then I noticed it stopped working.
I already had Full Fraps installed so I changed the screenshot button to Arrow Down.
I'm with you on the fact "it is broken", and I'd much rather have things "old school" too.
This is a known issue with Windows 7 (even a leftover problem from Vista maybe?).
Sadly for all my internet searches there is no solid solution other than 3rd Party Software.
Or learn to use the Windows 7 Snipping Tool, which from initial pokings isn't very good either.
I haven't worked with .Mos files yet, but I presume the problem is related to this issue.