DNS problem. Your options:
1) Fix DNS on your server. Change the Windows 7 PC's DNS server to just the SBS server. If it doesn't work, you didn't fix DNS on your server.
2) Fire up wireshark on the Windows 7 PC. Attempt to join the domain, and note what DNS entries are unsuccessfully resolved. Edit your Win7 PC hosts file to have these domains point to the server IP. Attempt to join the domain again. Do this about 3-4 times and you should be good.
"No battle plan survives contact with the enemy." - Field Marshal von Moltke