I don't have access to Windows 7 so am unable to test it on it; I haven't heard of it not working on Windows 7 before though.
It seems you have Direct3D 8, which I'm guessing means you also have DirectX 8. I believe game may require DirectX 9 or later, although I'm unsure about that too. Also, I would assume Windows 7 requires DirectX 10, so I may be wrong about associating Direct3D 8 with DirectX 8. But one I'd do would be to check which version of DirectX you have, and update it to 9 or later if it's at 8.
Also, is it a netbook? The game isn't intended to run on those, as they usually don't support a high enough resolution to run the game.