From Adobe Systems:
The Adobe Photoshop 7.0.1 update fixes a number of problems discovered after Photoshop 7.0 was released. The most significant fixes in the 7.0.1 release include the following: Photoshop now saves alpha transparency data in Targa files in the same way it did in previous versions. If the color settings color management policy is set to "Off," Photoshop no longer asks to save changes unless other edits have been performed. The total ink now defaults to 300% as it did in previous versions of Photoshop. The color of white areas in CMYK files saved as JPEG files no longer shifts. TIFF files with LZW compression are now written correctly. Files made with Photoshop now work better with Microsoft Windows XP's automatic thumbnail generation. Favorites now function correctly in the Open dialog box. Picture Package no longer locks up when it encounters incorrect file types while using custom page layouts. Metadata is better preserved in certain JPEG files. Photoshop no longer appears frozen when applying KPT3 filters. Photoshop now offers better compatibility with older Intel Pentium III hardware. Photoshop no longer produces a program error when resampling certain large 16-bit documents. An issue that prevented Photoshop 6.0 from opening certain files containing layer effects and edited in Photoshop 7.0 has been fixed. The Maximize Backwards Compatibility for Photoshop Files preference now correctly sets the state of the Maximize Compatibility checkbox in the Photoshop Format Options dialog box when you save a file as Photoshop (PSD) format.