I use it all the time, though not with Win7 that I recall when I was running it, but Vista so should be no difference there. I have on occasion seen the kind of message you are getting when I was logging in with user name and password instead of anonymous and password. Try that and it may do the trick.
That won't work as I know that I need a user name and password to gain access.
What version are you running? The home versions dont have all the same ftp and domain abilities as the professional/bussiness versions. On you may need to turn on simple file sharing and/or network discovery
Ultimate.
How do I turn that stuff on?