How to create symbolic links in Windows 7?
Open command line in designated directory. Write there:
mklink /J "typo3_src" "../typo3_src-4.4.2" mklink /J "typo3" "typo3_src/typo3" mklink /J "t3lib" "typo3_src/t3lib"
So you get a symbolic link from typo3_src to directory typo3_src-4.4.2 lying in the directory above.
Edit: 28.04.2016
Seems it has changed since I first wrote this post. In recent TYPO3 and Win 7 Professional this has changed or let me say, didn't work how it is stated above. I had to give the complete path, also it has changed in TYPO3 e.g. version 7, that you don't need to link the lib directory, but the index.php.
In the install description coming with the source of TYPO3 is written:
mklink /D C:\...\example.com\typo3_src C:\...\typo3_src-7.6.x mklink C:\...\example.com\index.php C:\...\typo3_src-7.6.x\index.php
Even you get managed that file symbolic links work in your instance the core update through Install tool won't work at all on Windows systems.
Thus that worked for me:
mklink /J "c:/xampp/htdocs/reisen.local/typo3_src" "c:/xampp/myTmp/typo3_sources/typo3_src-7.6.6" mklink /J "c:/xampp/htdocs/reisen.local/typo3" "c:/xampp/myTmp/typo3_sources/typo3_src-7.6.6/typo3"
Afterwards I copied index.php from source root into vhost root directory.