I solved it (without the VM)! Access 97 is now running in 64 bit Win 7.
I did this Google search:
install windows inside virtual machine
and clicked on the Windows Virtual PC home page. Then I clicked Help and How To: Windows 7. Next I clicked Make older programs run in Windows 7
. I viewed the video on Windows 7 Help & How-to - Microsoft Windows
and went the troubleshooting route. Its running fine now.
I ran the troubleshooter on the Workgroup Administrator which allowed me to create the system.mdw that wasn't created on initial install.
What fixed it was allowing permission changes to the /Windows/System32 folder.
So far Windows 7 is a dream. The 8Gb of RAM and quad CPU certainly helps.