RAW Medium is a conversion from large and some third party S/W will experience difficulties but with all the latest updates you should get it going. .dng converter may work too but it's more S/W, steps and slow. There are some updates and patches for PSE8 for the 7D file types if you check their site you should find them. They do not automatically come in to you and prompt you to load them from Adobe, which seems like poor service to me but probably help with new sales for them. When I got my 7D at Christmas I did several updates to PSE and the Canon S/W probably due to go through the exercise again soon. There is a lot of info on the web about this, I read up between ordering and receiving my 7D. In the mean time the Canon S/W will work for you but again make sure you have all the updates. You may want to try RAW Small (assuming file size was your concern - otherwise stay with large) as this like large is a genuine file not converted from something else.
Seems strange i know but true, from the research I've done. Another strange one most people don't know is the partial step ISOs are conversions from the standard ones as well, that's why they tend to have more noise than 200-400-800-1600-3200- and also why I turned this feature off on my body and only use the even ISOs mentioned above. Best of luck to you that you'll get your images off the card safely, let us know how you get on.
