There actualy _is_ a big red (well, orange) warning at the top of the update page that reads:
Please note: When updating your iFly to the newly released version 7 software, you must select the Aviation Databases and Geographic Databases options. Version 7 software is not compatible with version 6.x or earlier databases. If you have any questions please feel free to contact our support department.
Try again while following those instructions, and you should find v7 works just dandy on your 700.