I seldom venture into web page design, but do quite often resort to looking for Microsoft fables about what they're doing to us.

Using "Microsoft Advanced Search" for information on IE7 with search term "New Features" finds Some Articles on IE7 differences.

With your understanding of what you've done, you probably can eliminate most of the articles listed as not applicable to your problem. I can't guess whether that will leave any that are applicable.

Articles during beta releases and early final distribution of IE7 claimed that IE7 made changes "to make it more strictly compliant with the w3 Specification," and predicted some "incompatibilities" with prior versions of IE and with other browsers. Most browsers have used "proprietary features" to try to differentiate their "goodness" from other makers' "badness." (Trivial example, Marquee/scrolling vs Flashing text?) Lots of "gimmicks" crept in, some of which may no longer work or may work differently.

I'm not smart enough to tell whether it's related to your incompatibility, but the second article in the search return above -

Separation of Internet Explorer 7 from the Windows shell (KB928675)

- gives a somewhat crude description of one of the "new features" that seems to have been troublesome. Check the last paragraph, "Compatibility," for the "party line."

John