Windows 7 Running Daemon Tools Lite on Windows 7: A Step-by-Step Guide

Please look over this thread that tells which programs do not work with Windows 7.

It's the very first post:

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It will still give the usual "Compatible" warning on launching just ignore it as been working fine on mine for the last 3 weeks, it's likely just minor issues since Daemon themselves are still packaging it to v1.58 sptd which definiately doesnt like build 7600 as I found. Prehaps to be on the safe side dont have it auto-running and close when not needed.