Session cookies in IE7

I've come across an interesting problem that's only present in IE7, not
even IE6. I have an application with a number of different subdomains,
a few of which are static (programmed in) and a few that are dynamically
created by users. I have a login form that renders on every page
allowing users to sign in from anywhere.

In Firefox, IE 6, Opera, and Safari this login works from anywhere and
sets the session cookie that works across subdomains ([:session_domain]
= ''). In IE 7 the login & session across subdomains works
for all of the static subdomains but fails on the dynamic ones. I
investigated and found that IE7 isn't sending the cookie as a part of
the request so rails generates a new session ID for each request. An
even weirder thing is that it doesn't send a new session cookie down to
the browser, a new Session ID just turns up in the development.log for
each of these requests.

Has anyone experienced something like this before? with or without IE7?
What are some other things I could look at to figure out what's going
Why is this only happening in IE 7?
Does it matter than I'm running it through Parallels?