If you want to downgrade, you can download 6.0.5 here:
http://www.apple.com/support/downloads/itunes605forwindows.html
http://www.oldapps.com/itunes.htm
Uninstall iTunes 7.
Install iTunes 6.0.5
Then you need to recover the backup version 6 library made when you first upgraded to V7. It should be in the Previous iTunes Libraries folder which is in the iTunes folder.
It will be called iTunes Library yyyy-mm-dd.itl where the date is that of first upgrade to V7.
When you have found the backup, drag iTunes Library.itl and iTunes Music Library.xml out of the iTunes folder to your desktop. Then copy the backup library from the Previous iTunes Libraries folder into the iTunes folder. Rename it iTunes Library.itl and you should be good to go.
This will take the library back to the day of the first upgrade. You will have to add any changes since then.
Start iTunes and check that purchased music plays before plugging the iPod, it may be necessary to authorise the computer.