I stumbled on to it about an hour before you posted. Win 7 searched all programs and listed all that were not fully Win 7. It included TRS2004. When I selected it from the list Win 7 checked and determined XP SP2 would be the best mode. I let it happen and it worked, for me.
I replyed to your post and then tried to replicate it. I have not been able to find that function again as yet. I did discover if I select a program's .exe and it's properties, there is a compatiblity tab that allows me to decide on my own what compatabilty mode to use and make it happen. Try it.
If that fails, you should find the post "How to run TRS2004 in Vista & Windows 7" Or "How to run TRS2004 in Vista" at the TRS2004 section's FAQs, Tips and Tweaks.