In your case I would say call your ISP for the correct procedure for setting up your modem first. You need to plug in the modem and then wait for it to boot up completely before plugging in the router. After that follow the set up procedure for your router. You can't just plug them all in at the same time and expect everything to work.
This certainly isn't a Windows 7 problem although for your router to work with Windows 7 it may require a firmware update. You need to be connected with a wired eithernet connection in order to update the firmware.
The firmware for your WRT54GS version 7 can be downloaded from the link below. Click on "downloads" then choose the hardware version number. The most recent firmware for your routers hardware version is dated 3/1/10, so you will want to update your firmware once you are able to access your routers set up page. Linksys by Cisco - WRT54GS Support