Art posted on the Yahoo group last week that Mach3 runs fine on Windows 7 using the parallel port. My guess is that it has to do with the Smoothstepper driver? These are his instructions.
You need to go to the Mach3 folder, right click Mach3.exe , select properties, and set it to XP Compatibility, and "Run as Admin" , it will then run. Do the same with DriverTest.exe