Check out this statement from IBM.
“The V6R1 IBM i Access for Windows client will begin supporting Windows 7 as part of the next V6R1 IBM i Access for Windows service pack, scheduled for release on December 1, 2009.
There are no plans to support the V5R4 IBM i Access for Windows client on Windows 7.”
I understand that there is some sort of “compatibility mode” in Win 7. You might want to try running iSeries navigator under that.