Physical disks. The defragging was actually a mistake on my part, I
didn't actually want that to happen :-)
Once the client disconnected, all the space was indeed released and
life was good. However, it definately exceeded 8GB in total size, it
was closer to 18.5GB (I know I said 20 earlier) consumed by the one
Windows 7 client PC's cache.
If you get a chance to make sure the 8GB cap is indeed working in the
latest builds, awesome. Otherwise, disabling the silly automatic
defrag has cured all of my problems and everything has been working
very smoothly since my original post. Still love iSCSICake, it's a
fantastic solution that will be made even better when/if we don't need
to use physical disks for partitions > 2TB !! (hint, hint)
Thanks Jin!
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