Well, problem is solved! I had to try a couple things until I got to the solution:
1) Downloaded "Partition Saving" as described in *FIX* Wrong Drive Letters in Multi-Boot XP,Vista, W7
I tried to use option "Update Windows 2000/XP/Vista Registry
" but it did not offer me to change letter to C. It only showed D and E. So, I aborted this solution.
2) Tried to boot Windows 7 as far as I could (until I got to the empty desktop) and tried to start Windows 7 setup.exe from DVD in order to run a "Recover Installation" as it was suggested. It kept telling me that it could not find "setup.exe" (and every other executable I tried, even though they were there). I aborted this solution also. 3) Now, with the solution that worked:
Doing some research I learned that Windows 7 (and Vista) keep track of assinged drive letters to each partition in the registry. More precisely at: [HKEY_LOCAL_MACHINE\SYSTEM\MountedDevices]
I had to boot in safe mode (as my Windows 7 install would not let me run regedit.exe) and cleared everything
there in that key. The concept is to let Windows discover partitions by itself again and reassign letters again.
I rebooted my machine and DONE!
More of this procedure (with detailed explanation) at: Multibooters, Vista Dual and Multibooting - Drive Letter Problems
Thanks everyone for the suggestions and help!