You don't actually encode to a Player version, you encode using a codec version. And as it happens, 7 was the very first version of the Windows Media codec.
As Jim points out, it's about the CODEC. If you have the proper CODEC installed on the system, and the player can use it, then all should be fine.
If your WMP cannot use the WMV 7 CODEC, when properly installed, I would suggest downloading, installing and using, VLC Player, GOM, or MediaPlayer Classic HC. They are all great players.