I believe it is working how it is supposed to work. If you want it to work in another machine I believe it must be finalized.
Possibly, but there is no point in finalising a disc which you hope to add to/delete from etc later!
Even finalized RW disks can be wiped/formatted, basically they are burned down and it's like starting from scratch (except eventually they can't be burned down any further, so they are rewritable but it is still a finite amount of times; eventually they wear out. For a DVD-Ram I read this is amount is over 10,000 times).
Yes, I realise that. It's one solution.
I suggest having one set for each machine if you prefer to keep adding to the disk rather than formatting and finalizing each time. For files you wish to transfer back and forth maybe use a flash drive or network them together rather than non-finalized disks.
Yes, OK, except that XP can read from but not write to re-writeable media. I doubt if XP could even format a UDF disc, and even if it could, it would probably not be readable on a Windows 7 machine. I must experiment with this.
One possible, but very undesirable option is to install InCD on the XP machine, but this has the unfortunate side-effect that any disc that has not been formatted by InCD (e.g. a Win-7 disc) will instantly be made read-only 'in order to protect your data' !! as InCD thinks the disc is corrupt.
I have the two machines networked, so it isn't a problem, just a conundrum!