When I installed PAF on my son's Windows 7 Ultimate 32-bit edition, it installed just like in XP or Vista. I was able to run PAF and restore a backup (sent to my email account) and then do all of the ususal things: add data, edit, Save As ..., export and import gedcoms, create a new PAF file, print reports, etc.
I don't think it matters what folder your data is saved in. You should be able to run PAF and then open a PAF data file, restore a backup, or have PAF search for all PAF data files.
Let us know how things go. Windows 7 is new and all of us are learning its quirks. My son loves his Windows 7, as do many people. Others are not as happy with it. If you use a 64-bit version of Windows 7 you will still need to use the 32-bit version of Internet Explorer 8, as Adobe has not provided a 64-bit version of Reader or of Flash Player.