What's the difference between RAID 1 software mirroring and Fake RAID?

I think performance wise, your best bet is to try both and benchmark, and share the results here for everyone to see! I would suggest using the ATTO Disk Benchmark utility.

As far as which I'd choose, I hate "fake raid". Always caused me more problems than it prevented. Get a real RAID controller or do software RAID. The only reason software RAID wasn't very popular in the past is because of performance issues, but that's a thing of the past.

My two cents:

Windows 7 probably requires you to convert to dynamic volumes to do mirroring. In the past, this has introduced all kinds of headaches due to compatibility with other disk utilities. Also, dynamic volumes are very easy to mess up, if you ever have to do disk recovery operations. I know this from personal experience. I usually avoid dynamic volumes "like the plague".

Mirroring on your motherboard usually retains a compatible structure on the disk, meaning as long as your onboard sata drivers are also loaded in the OS, you can move either of the mirrored drives to the regular sata port, and boot into the OS just fine, so your not really sticking your neck out in terms of recoverability.

Performance wise, they are probably both about the same: both use your CPU to do all the work.

Finally, the motherboard RAID might have additional useful features, such as automatic e-mail notification if a member fails, which comes in handy....

Having had my primary IDE controller crash on a running Windows system with Software RAID -- and with my disks on separate controllers -- I'm sold on that being the right choice. When the IDE controller crashed, the visible result was a little triangle warning icon in the System Tray notifying me of the problem, but otherwise the system continued running normally. It was really quite impressive once I realized the magnitude of what had happened.

Compare this to the case with Hardware RAID where, if you lose the controller, you've lost both disks and the system obviously crashes.