Err=7 - Connection Problem.
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So far since you can't really do much of anything so far without freezing up or losing connection, I can guess you have a firewall and/or router?
If your running a Netgear router, you need to open up a port (how to do this is located in the index).
Make sure your firewall is allowing access for the game to work.
The port is 6112.
Let me know if any of this has helped.
I'm also wondering about something. When you drop from the game, is your modem lights still flashing properly? Or have they reset?