You can use T-SQL CASE function to convert bit field into number.
Also in the select field list you can only use columns listed in group by clause or aggregate functions.

SELECT A.InvoiceID, A.VenID, A.InvDate, 
     <b>CASE WHEN A.Closed=1 THEN 1 ELSE 0 END AS Closed</b>, 
     B.Vendorname, SUM(C.Subtotal) AS InvoiceTotal
  FROM Invoice A JOIN Vendor B ON A.VenID=B.VenID
  JOIN LineItem C ON A.InvoiceID=C.InvoiceID
  WHERE A.InvoiceID=1000
  GROUP BY A.InvoiceID, A.VenID, <b>B.Vendorname</b>, A.InvDate, 
    <b>CASE WHEN A.Closed=1 THEN 1 ELSE 0 END</b>

>SELECT A.*, B.Vendorname, SUM(C.Subtotal) AS InvoiceTotal
>FROM Invoice A JOIN Vendor B ON A.VenID=B.VenID
>JOIN LineItem C ON A.InvoiceID=C.InvoiceID
>WHERE A.InvoiceID=1000
>GROUP BY A.InvoiceID, A.VenID, A.InvDate, A.Closed
>
>The "Closed" field above in the Invoice table is a bit field and in SQL7 I get "Cannot group by a bit column." error. How do I pull this off so it works? TIA.