Hello
This is probably a common issue. Since the Apple Watch Series 7 comes in 41mm and 45mm, the Leather Band might not fit, as it was made for a 40mm or 44mm watch. Some bands may work (as they are more compatible with other watches), but the leather band may not be as flexible with other sizes, because it has to fit exactly within the notch. Others may not need to.
If you are really set on the leather band, you may need to buy another for the 41mm or 45mm watch so it fits exactly. They are available online or in the Apple Store app for around $99. If you don’t want to buy a need band, you could start using your Series 3 again with the leather loop (if you like it that much), or just use your other bands you already have for your Series 7. You probably can also buy Apple imitation leather bands for half the price online as well.
Hope this helps.