Hi Frank,
Please go to your LiveMeeting Web Administration Console to check the “Recording” settings in “meeting options”. Ensure that you choose “Presenter can record” in “Server Recording” and “Only presenters can record” or “Presenters can record and presenters can allow attendees to record” in “Participant Recording to Their Local Computer”.
What's more, in the meeting console click "Attendees"-->">>"--> "permissions" to ensure that "allow attendees to create personl recording" is checked.
If the settings are all right, you can try to reinstall LiveMeeting 2007 client to see if it works.
Hope this helps.
Lu Zou