I spent 3 hours dancing the dance of fools in 32 bit windows 7 with a similar problem. Installed Win7, installed Pegasus, pointed Pegasus to my old mail drive - it saw all the user accounts, happily I exited and thereafter I'd only ever get "user does not exist".
I tried UNC paths and drive letter paths, always the same. pcconfig always came up with crippled strings when I recalled it. 3 or 4 uninstalls, wipes and new attempts later I deleted pmain.cfg in the pmail directory. Again pmail found the old mail drive (multiple user option).
This time I double clicked on each and every user in the window, and Eureka! Pegasus can now find the users. I thought that the .usr file should've taken care of that in the first place, but apparently not. Don't recall ever having to do that before.
Unfortunately, every time I try to start Pmail now, Win7 throws up a requester about 'unknown publisher'. What a pain. I haven't been able to figure out how to set clearance for pmail yet.
Much, much worse, however is, that Mercury can pick up mail, but doesn't sort it into the right place any more. Major bugbear. I shall move a query that problem over into the right forum later ...
-P.