Sh3 has no trouble with Windows 7 per se. It is the release/version containing the Starforce copy-protection that makes it a deal breaker.
Ever since Vista it is not advised to install the game in the default location, but rather give it a custom folder on your harddrive. Keep it out of the "Program Files (something)" folder.
Sh3 does have issues with widescreen resolutions out of the box. You can try a widescreen mod (somewhere in the download section I'm sure), or find a way to make your graphics-card scale the resolution and live with black borders.
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