Yes NV1 works in Windows 7 – 32 bit version.
I am using the Release Candidate version of Windows 7 – 32 bit and NV1 works just like it did in Windows Vista – 32 bit. The only drawback in both of these versions of Windows is that a DOS window cannot be made to go full screen.
The 64 bit versions of Windows 7 or Vista will not run NV1. But there is a piece of software called DOS Box that according to their site will run on Windows 64 bit and allow DOS software to run inside its emulator. I have downloaded it but have not had time to test it.