Win7 needs a valid 32bit icon archive. You need to use a tool that will create a valid 32bit icon archive.
Green Fish Icon Editor GFIE, and there are a few others that are freeware.
Note, that doesn't mean the icons need to be 32bit. They can be greyscale, 2 bit color, 8, etc. Just the icon.icl file itself needs to be 32bit, not 16.