Is it just me or does Windows 7 index-based searching still not work as well as Agent Ransack?

Just to confirm your suspicion Agent Ransack does not use indexes there's actually a KB article on indexing (although for the bigger brother FileLocator Pro it's still valid):

http://www.mythicsoft.com/kb/Does%20FileLocator%20Pro%20use%20indexing.ashx

Whether Agent Ransack performs better is down to the type of searching you're doing and the type of documents you're searching through. Windows Search normally does a good job of indexing Office type documents (e.g. Word, PDF, Excel etc) and if you're searching for a whole word the speed of indexed search is MUCH faster than a non-indexed search product like Agent Ransack, especially if you are searching the whole drive.

Where Agent Ransack will beat indexed search is on file types not indexed (or files not YET indexed), which quite often includes code files, logs etc. Also, non-indexed search works well for partial matches especially when the match isn't at the start of the word boundary, e.g. searching for 'companyname' in an email address like [email protected] (not to mention other features like print preview and export). Then you have all the security issues of indexes containing sensitive data that isn't easily controlled.

Personally, I recommend indexed search to my non-technical friends and family, who generally have no idea where things are saved, and Agent Ransack to tech-minded friends.

One final note, if you mainly just search by file name lots of people rave about a free indexed based tool called Everything by Void Tools.