Considering theres been huge leaps in software since windows 95 its hardly a surprise it doesnt work....it was tricky enough to get working on xp although at least there was a patch for xp to fix that, though I wouldnt hold your breath for a windows 7 fix.
p.s Red Alert wasn't the first C&C game....but prehaps the recent "C&C Decades" collection may have a fix that will work.
Found this post on the official WIKI:-
"
Compatibility issues Command & Conquer: Red Alert can be directly installed on either
Windows XP and
Windows Vista. However, upon the first installation attempt the installer notifies that "
Red Alert can only be installed on Windows 95" if an installation is attempted on either of the two
operating systems. It is possible to install the game with the assistance of the
Link Removed - Invalid URL, a program that manages the installation, program updates and Vista compatibility in one easy installation.
The
Red Alert Terrain Editor also has compatibility issues on newer operating systems. In order to successfully run this program under
Windows Vista or
Windows XP the program's executable file needs to be configured to run under
Windows 95 or
Windows 98 compatibility mode. This will allow the program to operate smoothly under the Windows Vista OS.
It however, also remains possible to manually install the game and its
expansion packs, by running
Red Alert's
executables in Windows 95 compatibility mode, and by replacing the "Thipx32.dll" file which the game installs within its main directory with an updated version
[1]. On the other hand, EA Games had released Command & Conquer: First Decade on two double layer DVDs which consists of all of the C&C games up to and including Generals and its expansion. This compilation of all C&C games is the easiest way to install even the original
C&C Tiberian Dawn, which came out when Windows 95 was popular. It is however possible to install the DOS version of the game by setting the setup in Windows 95 compatibility mode and then running it under a MS-DOS environment.
All versions of
Red Alert, as well as the demo, are rated gold in
Wine [18] and are marked as "supported" in DOSBox
[19].
The easiest way to play Red Alert on XP, Vista & Windows 7 is with
Command & Conquer: The First Decade.
"