Anyway, once you get away from this, installation is smooth. But, soon as you install and launch Delphi 7, it throws an error message which says "Unable to rename <>\Delphi32.$$$ to Delphi32.dro. Ouch!!! we have run in to problem.
The solution is to make sure that the Bin folder under the Delphi7 installation has write permission to the user account under which you have logged on to Vista. Also make sure the folder "Projects" too has the write permission for the same account.