ED:
Yes, when you do an install of VFP7 on you developmental boxes, the vfp7 runtimes are installed. However, when you make an install with ISLEVFP7, the merge modules that are available are the wrong ones. They are the merge modules for the older HTML Help for VFP6. So the setup you create and install on another machine not having vfp7 html runtimes will not be able to access .chm from you vfp7 application.
To get html help to work with you vfp7 files you must include the files manually.
G