1. Yes the programmer works with Windows 7.
2,3. Yes it is mandatory to recover the board before programming it.
Please follow procedure given in user guide: Programming an EZ-BT WICED Module – KBA223428
Also, follow procedure mentioned here for CYBT-343026 module- Re: CYBT-413034-02 programming through "WICED_MOD_Programmer" app
If nothing is working, try programming the module with an empty application once and then try to load your application firmware in the module.