I did it with the editor, I tried running the game twice, both times barbarians appeared despite the setting in the editor for no barbarians.
I then did a normal game (no scenario, just new game) to see what would happen if I chose no barbarians. There were no barbarians in this game.
I went back and tried the custom game again. This time, barbarians correctly did not appear.
I don't have a great deal of technical expertise, but my guess is something screwy with the conquests.ini file. I have to edit the file to include the "KeepRes=1" line so I can play the game on a wide screen monitor. The conquests.ini file isn't even created until the first "New Game" is started, so after I installed, the first thing I did was start a new game just to create the conquests.ini file so I could edit it. I had problems saving the file after editing it, because every time I tried to save it, I got the error that I was denied permission to modify the file. I'm new to having Windows 7 too, and it took me a while to figure out how to set the permissions on the conquests.ini file so I could actually save it. Every time I start Conquests, Windows 7 gives me the pop-up that Conquests is attempting to modify my hard drive (as if it were a virus) and I have to check permission to continue.
Again I'm no expert, but I'm guessing that between the way Conquests creates and modifies the conquests.ini file, and the way Windows 7 locks down files and prevents access by default, that maybe the proper settings were not being written to the conquests.ini file regarding the barbarians.