This is an odd problem and I'm sorry I don't have an answer for ya. But I'll check my sources and see if anyone else has encountered this issue.
In the meantime the first thing to try is to delete Photoshop's preferences file. With PS 7 on Win2000 you'll find it at this location:
Documents and Settings\<username>\Application Data\Adobe\Photoshop\7.0\Adobe Photoshop 7.0 Settings\
In that folder will be a file named Adobe Photoshop 7.0 Prefs. Delete it (when Photoshop is NOT running).
That may very well fix your problem.
If that doesn't work you might try uninstalling and then reinstalling Photoshop.