How does one proceed .........
Steve
Well, at this point I'd definitely try something a bit extreme, and a bit out of the box. I agree with your assessment that it is perhaps a "systemic" issue of incompatibility between Windows and Photoshop, but the fact that MANY of us also have Windows and Photoshop and do NOT have the magenta color shift symptom points to some other as yet not pin-pointed factor(s) as being relevant.
So, I ask again which image apps on your system DO exhibit the color shift, and which other image apps DO NOT?
Also, I am using a 64-bit version of Win7 (Pro) whereas you are using a 32-bit version of Win7 (Ultimate). Is that relevant? Don't know.
But as for my "solution", well not so much that yet as much as one more fact finding adventure that only costs a few hours of your time:
(1) preserve the folder(s) with your data (i.e. your images and anything else) to some backup which is easily available for a restore of that data, unless you already have a normal backup procedure for safeguarding your data from which that data can easily be restored
(2) take a "system image" backup of your current C-partition so that you can restore it later if you have to
(3) wipe the C-partition and perform a brand new completely from-scratch Win7 install to "start over", into which you will possibly reinstall all of your 3rd-party application software, customizations, etc., if it comes to that (you must be willing to do that if necessary). Install video driver, and other necessary hardware software, BUT DO NOT INSTALL EPSON PRINTER SUPPORT... which means DO NOT POWER ON THE PRINTER.
(4) Apply all Windows Updates and basic minimal customization. You want to expend minimal energy to do this Win7 reinstall for the experiment.
(5) restore the image folders from your backup storage to whatever hard drive location you can easily access them from, just so you can experiment with this
(6) if you say Windows Photo Gallery (which again, is NOT AVAILABLE on my own Win7 Pro x64 system, but which you say IS AVAILABLE on your own 32-bit Win7 Ultimate system) currently exhibits the magenta color shift symptom, see if it still exhibits this symptom when now running on the brand newly reinstalled from-scratch out-of-the-box Win7.
(7) install Phototshop from scratch, and once again repeat the test on your images, and see if it still exhibits the magenta color shift symptom.
Depending on the results of (6) and (7) and anything else you might care to try, your next course of action is either:
(a) if the magenta problem has disappeared with the brand new cold from-scratch Win7 reinstall, then your current problem can only be attributed to something that's become permanently corrupted or imbedded in your current Win7 Registry or system environment due to user settings of other installed software. Obviously you have not [yet] repeated that action if (6) and (7) do not [yet] fail again.
Then proceed with the rest of the complete software reinstall into your brand newly reinstalled win7 WHICH WORKS FINE FOR COLOR. At the other end you'll have "emerged victorious", with just some probably long overdue "cleaning house" performed.
==> at each step of your software reinstall, keep repeating the image tests to see if the magenta problem has finally reappeared (or not). I'd certainly take a "system image" backup before finally powering on the Epson printer and installing the Epson software, just in case it turns out to be "the culprit". Having the backup available allows you some options to decide how to react, if it is the Epson software which is at fault. But... maybe it will not be "the culprit". In fact, maybe the magenta problem will NEVER RETURN AGAIN (which is my prediction), in which case again we can point to a somehow corrupted current Win7 system where the only "solution" is a complete Win7 cold reinstall from scratch.
(b) if the magenta problem still appears (which quite frankly my own intuition tells me WILL NOT BE THE CASE), we can talk about it. Since you've not solved the problem, you might as well just restore the "system image" backup you took at the start, to get things back the way you started and with just the loss of a few hours of your time.
I myself would not give up without trying the "clean reinstall of Win7" approach effort, since my own feeling is that it's tied to your Epson printer software... or some other system corruption.
It is virtually guaranteed (in my mind) that a complete reinstall of Win7 will see you come out the winner.