Generally speaking, yes, but you may have to run it as Administrator or disable UAC to use all the features (e.g., droplets) fully.

Also, as I recall, Photoshop 7 and earlier don't work well with disks that have free space in excess of 1 TB.

Finally, even though you may have a 64 bit Windows 7, remember that Photoshop 7 is strictly a 32 bit application, and thus will always be limited to accessing somewhat less than 3 GB of RAM.

-Noel

XP mode is a virtualization process wherein a virtual copy of XP is run under Windows 7.  You can often run older software that just won't run under Windows 7 directly using XP mode - but as I mentioned I don't think that's strictly necessary with Photoshop 7.0.  I have a copy of Photoshop 6.0 running just fine directly on my copy of Windows 7 Ultimate, not using XP mode.  I don't have a copy of Photoshop 7.0, so I can't say I've personally run it, but I do know of folks who have.

-Noel

To get Photoshop 7.0 (or 7.0.1 in my case) to work under Windows 7 64-bit, I ran the CD's Autorun under Windows XP service pack 2 compatibility. I also set the same compatibility prefs in Win 7 for the setup.exe file in the Photoshop directory of the CD-ROM.

You'll possibly encounter an error about the scratch disk being full - this is because PS 7 fails to understand big hard drives (the huge free space number looks like an empty disk, it's kinda like a Y2K problem, since PS7 programmers or the API writers never imagined so much free space, I guess). In this case, two things are important:

• You need a partition that's less than 1TB (not sure about the size, it's in another thread) for the scratch disk. I used my system's recovery partition (only 2GB free, however). Other advice I found was to create a scratch partition using Windows 7 partitioning. Maybe a USB key would work? Surely not very fast...
• PS 7 will fail on startup with the "scratch disk full" error and exit. To get PS 7 to allow you to specify it, hold down CTRL and ALT when the program is launching. You'll be given a chance to indicate the partitions.