I'm not familiar with elm cable software but I'm familiar with windows including Windows 7. The first thing that comes to mind is try running the software under XP mode, this allows software that was designed to run on Windows XP to run on windows 7. To do this you have to do a few thing which is is a lot to explain, just do a quick google search of Windows 7 XP mode and that should get you started but unfortunately this only works on Professional, Enterprise, or Ultimate editions.
Also I would like to say that those cheap vag-com cables off ebay was the best $13 Ive ever spent.