This interesting post in the newsgroup led me to discovering another nasty bug of latest XP Embedded bits (SP2, FP2007).
Basically the issue was that the poster was having troubles accessing the metadata of media files on an NTFS partition. More specifically, their script code that called to getDetailsOf method of the Shell.Application object was failing to return proper results but returned the success error code.
The issue showed up when the developer moved to FP2007. First thought was the problem was there due to a missing component that could disappear (vs old builds) because of the major re-factoring Microsoft did in that Feature Pack.
However, the source of the problem was in the new component that was added to the database update - "Windows Media Player 10.0". The previous player components - "Windows Media Player 8.0" and "Windows Media Player 9.0" (this one is ghost component) - included the shmedia.dll library but the Player 10 didn't. That library is actually responsible for parsing file content, that shell API are loading up, and extracting and parsing the metadata that file may contain. That metadata is heavily used by newest media file grouping feature of Explorer shell with Windows Media Player instead on XP system.
Conclusion: make sure to include shmedia.dll library and register it (it is a COM object so you want to use the regsvr32 tool at run time or simply add a FBA DLL/COM Registration resource command in TD.
Note that the shmedia.dll library is surely in the XPe repository because of the previous versions of the player component.