I have a Gadget for the former Vista Sidebar (now Gadgets are shown on the desktop) that stopped working in Windows 7.
In the gadget's html file I am using an object html tag to display an ActiveX object. Insted of the object, I only get a red cross shown in the gadget in Win 7.
In Internet options on the advanced tab allow active content to be shown locally. You may also need to enable activeX in Security settings.
Regards Jens Peter Karlsen.