It looks like the original code was written for 7zip, which is C++, under the LGPL. That was converted into C# for ImageMaster, under the GPL, and that was apparently used in the Win7 download tool as well.
Comparison of the ReadFromFile code in 7zip, ImageMaster and the download tool:
http://www.withinwindows.com/files/gpl/comparison_1.txt
I haven't seen anyone claim that 7zip code in question wasn't written from scratch. I think that MSDN sample idea was just (valid, at the time) speculation about the early ReadFromFile example, given how "canonincal" it looked, but there's another example now which looks unlike sample code. (Could still be from a sample, I guess.)
I guess it's possible the MS code was an independent conversion of the 7zip code to C#, which would (I think) mean it's LGPL and not GPL, which might be alright (or mean they only have to release code to their changes to the library code, not the whole module). Commenters say all the class names are identical to the ImageMaster code, though, and not (from looking at the examples myself) identical to the 7zip class names, so seems likely the ImageMaster code is what was copied.
Whatever the status of the MS code, ImageMaster's GPL code is fine (assuming 7zip's LGPL code is fine) as you're allowed to turn LGPL code into GPL.