Once photoshop opens and works normally go to Edit>Preferences>Adobe Online and choose Never
then hopefully next time you start ps 7 you won't see the updater screens.
(the update server for ps7 has been offline for awhile and that's why the updater gives those errors)
Also, in photoshop 7 if you go to Help>About Photoshop, which version does it list in lower left of the splash screen?
It should be Version 7.01 if your all up to date.