That sim will work fine in windows 7 just make sure it installs in program files (x86) which is the 32 bit folder. Windows 7 installs it by default in that folder just make sure it does. Also running programs like this in XP mode it not required. XP mode is meant for basic programs not games, or graphic intensive applications. I am running realflight G3.5 on win7 64bit and it runs great. I just used the G3 disc and then ran all the up dates to install G3.5 and it worked fine.

Good luck