YOu might need to reinstall the OS from scratch and then FCP 7. I haven't seen FCP ever listing HDV as HDV1, HDV2. That's odd. If I were you, I'd back up my files, erase the hard drive, install Lion or Snow Leopard from scratch...update fully. Run Disk Utility, repair permissions...then install FCP 7...update fully, repair permissions again.
there was a recent software update that seemed to screw HDV up. Do some searching here over the last month or 2 and you'll find a bunch of posts and some possible solutions.
Worst case scenario, do as Shane suggests. But might I suggest you take a look at the user tips section of the forum. there are some great tips on how to prevent these sorts of problems by cloning your startup drive, etc.