For those of you who cannot get the compatibility file, you can create one yourself:
1) Download and install the Application Compatibility Kit from Microsoft
2) Run Compatibility Administrator
3) In the tree on the left, under Applications, find Might and Magic VII. Right click it and say "Copy"
4) Scroll down to the bottom of the tree to New Database(1) [untitled_1]
5) Right click on it and paste. You should see Might and Magic VII under it. Go to File->Save in the menu. Call the database mm7. Click ok. Browse to the folder with might and magic 7 (c:\Program Files\3DO\Might and Magic VII for example) and save.
6) Right click on what is mm7 now with the path (was New Database(1) [untitled_1]) and click Install.
7) Now everytime you run MM7.exe and MM7Setup.exe, it will use the compatibility fix.
Incidentally, to get mine to work, I needed to put Software Rendering AND Disable Accelerated 3D Sound by running mm7setup.exe. Furthermore, I needed to turn off compatibility mode for both applications (i.e. don't put Windows 95 mode).
Hope that helps,
Steve