If OP is correct that GRUB was watiting for the 100mb System Reserved partition to return to start working again, then it might be referencing it by letter. I simply don't know enough about GRUB or Linux (another OS) to know for sure.
Hopefully someone else will, or OP can try it once BFK reports if 100mb drive letter can be removed and returned successfully. I'd make a Macrium Reflect or free Paragon 10 image first so you can start over if necessary with the flexibility to reimage to specific partitions.
No, no. Perhaps I wasn't too clear:
GRUB, and Linux for that matter, don't care about letters. In Linux a partition is referenced by its device.
We have a hard drive and two partitions.
Windows would call them, C: and D: Now, there is a third partition: the extended partition containing D: but Windows won't confuse you with that (not in MyPC at least).
Linux would say sda (SATA drive a) for the disk. And sda1 for C: (first partition in sda), and sda2 for the extended partition containing D:, and sda3 for D: itself.
Long explanation:
Now, you have to tell GRUB where the boot files are for it to be able to boot Windows. In the past you just told it where C: was, because there was no separate 100MB partition for booting up in previous windows versions.
For Win7 though, you tell it to boot from sda1 (the 100MB partition). Now, if you format sd1, GRUB won't boot Win7 (because there is nothing it can run from there). But if you change the letter or hide the partition or whatever it will still boot from there because the files are there in the same place on the HD (sd1 in my case).
Grub did not stop working once I formatted C: and the 100MB partition, only the Windows7 entry in GRUB, the rest was OK because the other partitions were untouched.
When I restored the 100MB partition at first, (without following BFK's indications) the files came back to sda1, so the entry became functional again. This happens because GRUB is looking for certain files in sda1, and at fisrt they were deleted, but later they came back there so it could run them again. It's not a matter of the letter, as GRUB does not look for E:\Whateverfilesitneeds but rather sda1/whaterverfilesitneeds.
By wiping or formatting a partition, you change its content, not its position, so if you put the filesystem and the files back there GRUB detects and runs them. But if you change the position of the partition, GRUB won't be able to boot Windows unless you tell it to look for them where they are now.
My guess is that Windows' bootloader works differently, maybe it does look for a letter, and if you remove it, it won't be able to find the partition.
Short explanation: the way Linux maps the drive differs from the one used in Windows. Win uses drive letters, whereas Linux uses something else. If you change drive letters you screw Windows' bootloader but not GRUB. If you change partition position you screw GRUB.
Correct me if I'm missinformed.
