sql requires Windows Authentication and Microsoft has decided to change this or do away with it in Vista/W7. Not to worry though - SQL allows you to log in without windows authentication. Install the program and do not select windows authentication to log in. Use a user name and password - works great on Vista - should work the same on Win 7.
You should start thinking about moving to SQL Server 2005 SP3 or SQL Server 2008 SP1 for compatibility under W7.