Are you talking about fat clients for development, or HTML clients?
If the former, then you must be running Tools Release 8.97. Earlier Tools Releases used MSDE for the local database. There was a known incompatibility between MSDE and Vista. Tools Release 8.97 uses SQL Server Express 2005, and is certified to run on Vista.
If the latter, then you have to be running Tools Release 8.96.1.0 for IE7 support.