character literally disappears from the screen
Only the character nothing else.
and the game will not let you proceed you can't pick up anything or do anything else.
I am running on windows 7 which you are suppose to be able to do according to the Jacket it came in,
Windows 7 is not the problem.
Your video card "might" be the problem if you're using Intel graphics for video. Specs I found list either Nvidia 8 series or ATI x1600 or better or DirectX 9.0c-compatible with 256MB of discrete video memory.
I tried Googling
Raven "Legacy of a Master Thief" "disappearing character"
and
Raven "Legacy of a Master Thief" "character disappears"
and found nothing relevant. But in general a disappearing 3D character in a 2.5D game suggests a video card (or video driver) incompatibility or insufficiency.
If the video card is not the problem, does the problem happen every time you load from a save and replay?