Inkscape
http://inkscape.org/
This program is a vector based graphics program that excels at making scalable images. While it's sometimes slow and often crash happy, it does a great job at making images that can scale down to icon sized.
Many of the icons in my programs and the graphics on this website are made using this tool.
SysInternals
http://technet.microsoft.com/en-us/sysinternals
This is a collection of utilities that are irreplaceable for monitoring, diagnosing, and fixing a Windows operating system. My personal favorites are:
Process Explorer - a more detailed Task Manager
Process Monitor - shows any desired level of resource access by any or all programs
Autoruns - detects and edits every location a program can be automatically started in Windows
Opera
http://www.opera.com/
My browser of choice for over a decade. My favorite features are mouse gestures and a great RSS reader*.
Makelinks is my own extension for Opera for turning text web addresses into clickable links.
EDIT: The extension Smart RSS replaces the reader removed from Opera.
Audacity
http://audacity.sourceforge.net/
Audacity is an audio recording program. I tend to use it as a multi-track recorder and all around home studio.
Handbrake
http://handbrake.fr/
Handbrake is one of the quickest video converters I've used. While it now only generates MP4 and MKV files, it does an excellent job of turning my DVDs into something usable on my TV connected devices. It won't directly decrypt DVDs, but it will just by copying a third party DLL.
ImgBurn
EDIT: ImgBurn is no longer freeware, it's adware. [link removed]
I've not used the included software with my DVD burners in years. This little program works better and is easier than any of those other crippled programs. Also unlike those other programs, it works when I upgrade my operating system.
This program will also generate and burn ISO images.
7-Zip
http://www.7-zip.org/
My archive program needs are very simple. I either view my archives like a folder, or I want to right-click on an archive and automatically create a folder and extract the files. Not only will 7-zip add Explorer extensions, it comes in 32 and 64 bit flavors.
Media Player Classic
http://mpc-hc.sourceforge.net/
A very simple video player that supports almost every format and codec in the world. It was designed to mimic the look and functionality of the original Media Player - a simple but effective interface. It's functionality is still surprising.
Metapad
http://liquidninja.com/metapad/
An extremely fast opening lightweight Notepad replacement that offers a very nice set of text features - including URL detection.
Notepad++
http://notepad-plus-plus.org/
A light weight text editor that has many great features: a dead simple macro recorder, syntax highlighting, and so on.
LICEcap
http://www.cockos.com/licecap/
A dead simple tool for recording part of the screen as an animated GIF.
Altap Salamander
https://www.altap.cz/
My favorite file manager is now freeware (as of 2019). This is a dual-pane manager that makes it painless to get things done. It's highly configurable and supports just above every archive type you can imagine.