I am using windows 7 computer and gem worked on xp so I am wondering if anyone knows what part of windows 7 could be stopping GEM from working.

Is Civ4 compatible to win 7?

Yes it is. I would check the installation folders, I believe windows 7 creates a new one for My Games. Especially if rather than the upgrade you did a full re-install (to switch perhaps from 32 to 64 bit?).

My two cents.

I'm playing it on the windows 7 release candidate. I wouldn't think that that release version would be that much different.

Have you tried running it as an administrator and in xp compatibility mode?