Tim,
There is an interesting reading in the SetupBuilder help (see attached screenshot).
The WOW64 subsystem provides redirection at the Registry level. Computers that are running an Windows x64-based operating system use a different registry layout to handle both 32-bit and 64-bit programs. The registry layout changes in x64 Edition versions of the Windows operating system make sure that the programs hard-coded .dll paths, program settings, and other parameter values are not overwritten. If the call is from a 32-bit application, then the call to access the HKLM\Software registry hive is intercepted by the WOW64 subsystem and redirected to the HKLM\Software\Wow6432Node. If the call is from a 64-bit application, then it is routed to the HKLM\ Software node.
BTW, do not hard-code "HKLM\Software\Wow6432Node\yada" in the function that reads the registry key from your app. Windows handles this automatically. Use: "HKLM\Software\yada" instead.
With regard to the second question, your SB7.x installer is automatically Win7-compliant. If you are using the "#embed UAC manifest..." compiler directive to make your own applications UAC-aware and you would like to embed a Win7-aware manifest into your .exe files then yes, you should set "Compatibility Information" to "Windows 7".
Does this help?
Friedrich