Yes, it does. They are stored as REG_LINK keys in the registry.
Yes and no. Symbolic links are supported on the NTFS version shipped with *gasp*
Vista. However, the special kind of symlink shown by CtDs - a
NTFS directory
junction - is supported since Windows 2000, and can only be used to link
directories.
The registry REG_LINK keys are not at all related to the file system, and allow
you to use HKEY_CLASSES_ROOT as an alias for HKLM\SOFTWARE\Classes in windows
registry, for example.
I apologize for contradicting you here, but you can certainly use file symbolic
links as well: mklink /h. This is the default if you give no further arguments.
And you can choose between junctions (/j) and /d directory symbolic links.
The latter kind is used by Windows internally to link various system folders to their
real locations (for example to relink Documents and Settings to Users).