Basically, subversion 1.7 Windows command line client cannot make svn copy URL -> WC if the URL contains externals. It adds it to the working copy index, but cannot finish the operation due to fail like this:
svn: E720005: Can't move 'C:\svncopy-tools\svncopy_2pgsxIK_6s\stable1\.svn\tmp\svn-256CA474' to 'C:\svncopy-tools\svncopy_2pgsxIK_6s
\stable1\ExternalsContainer': Access is denied.
Here you can find the zipped reproducing script I have constructed according to recommendations.
Versions that have the issue: 1.7.1, 1.7.2.
Versions that do not have the issue: 1.6.*
UPD: The issue is acknowledged in firstname.lastname@example.org. But there is still no any estimate when it will be fixed. At the moment, it is being discussed if they have to include the code of the fix into Windows client only, or into all clients supported.
Regrettably, I found no solution at the moment. As a workaround, you can use subversion 1.6 client, if you really need this workflow. I really need it, because this command workflow is used in svncopy.pl contribution script, and this script is used in my environment.
I think, we have to report the bug and wait for fix. I have reported it to email@example.com, as recommended on http://subversion.apache.org/docs/community-guide/issues.html, and then it has been moved forward with reporting this issue to subversion development team.