Steps to follow are;
1. Open up the Registry editor - type regedit on command prompt.
2. Look for the key shown below
HKEY_CLASSES_ROOT/TypeLib/{EAB22AC0-30C1-11CF-A7EB-0000C05BAE0B}/1.1/0/win32
3. Click on the "Default" row and see the value there. If it's value is "C:/WINDOWS/system32/shdocvw.dll", then that is what causes the above mentioned issue. If you have installed Windows in a different drive; C:/ must be replaced with the that letter.
4. Replace that value with "C:/WINDOWS/system32/ieframe.dll".
5. Now restart IE7, and load your GWT application.