Using Windows 7 64 and Media player 12, it took me waaay too long to figure out how to get the visualization to execute. You can only launch visualizer from the Now Playing screen.
If you are on the screen that shows playlists in the middle and and the Play/Burn/Sync tabs in the upper right (attached) you have to use Ctrl + 3 to get to the Now Playing screen. Or, you right-click on the window space above the Search field, and choose "View>Show Menu" which will display File/View/Play/Tools/Help. From there use the View menu to get to Now Playing. From there it's easy, just right click and choose Visualizations. You can choose to show or hide the playlist as well.
Thanks to a Yahoo post I read on Google to get me started.