Does Windows 7 say what the issue this is, and does Windows 7 offer th 'Check for a solution'?
How did you install the printer? Does it have a software CD with compatible Windows 7 drivers?
Xerox seems to have a Windows 7 driver download page here;
See if that helps.
I just installed a new Dell computer with Windows 7 and Microsoft Office. While the printer is properly installed and attached to the computer, the computer insists there is an installation issue. Can anyone help please?