Do you mean the Windows 7 operating system? I also have the old Big Kahuna Reef game on disk and it won't install on Windows 7. Did you get the game from Big Fish? If so, there have been several updates to the game and you should download it from there.
If you didn't get the game from Big Fish, you might try opening up the disk itself and finding the installation file, right clicking and selecting Run as Administrator. You also might try right clicking the installation file and then Troubleshoot Compatibility and then follow the prompts.