>A colleage of mine mentioned to me that Fox 7 is purely geared towards client/server.

The previous versions of VFP can be succesfully used as a front end to the SQL Server. There's nothing new about that in VFP 7.

>If so, does it address improvements on index file corruptions?

AFAIK, nothing's changed about that eaither.
In Vfp 7 there're a couple of new features related to data: OLE DB provider for VFP and DBC Events.