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Sue about Layer styles.  You may want to reinstall PS7 sounds like a corrupt file to me.

More on Layered Styles!!

Here's a link to Ben Willmore tips.  www.digitalmastery.com tips 4/28/03.  You'll love it.  . I followed these incredible tips on an existing psd file.  I was completely blown away.  For example, you can drag in any layer style and alter the later one or all the layers if linked.  Fantastic and then scale the effect, and remember it will apply to layers that are linked. 

If you read the entire tip sheet you'll be amazed at what Layer Styles can do plus multiple strokes, etc.

PS is full of little known mysteries like this, discovery is a treat!  8) ENJOY 8}