EDIT 1: 8/31/09 UAC
I think I've made a breakthrough after experimenting with different files and/or different settings. After some time I've finally been able to run Windows 7 beautifully on my S170 without any issues. The following instructions will work for similar Vaio or could possibly be of a reference for other Vaio series, unsupported by Sony.
Instructions: How to Install Win7 on the S Series
(Tested with Build 7100 and 7600 on a VGN-S170)
After a clean installation of Win7:
1. Install Drivers for Wireless (Intel 2200BG). I used a separate computer to get these drivers, or just have it on a Jump drive before Win7 install.
2. Open Windows Update and install everything. This will install some Win7 updates plus drivers for Programmable I/O Device, ATI 9600/9700 and SoundMAX.
3. Reboot Computer
EDIT 1: Before installing the Sony drivers, first go to control panel and turn OFF User Account Contorl (UAC). Move the slider all the way down. This will make sure the Sony drivers will operate the way we'll modify them later.
Next 4 drivers are a combination of original S170 WinXP drivers and S360 WinXP drivers. Use S170 driver for Utilities and the remaining 3 from S360 WinXP drivers. Download them from Sony website. Install them in the order shown here:
1. Utilities (S170) (Reboot Computer)
2. Sony Shared Library (S360) (Reboot Computer)
3. Programmable I/O Device (S360) (Reboot Computer)
4. Control Device Driver (S360) (Reboot Computer)
For the remaining drivers, use the original S170 drivers:
7. Touchpad. Reboot after installation. Windows will ask if you want to run the program, say "never notify me again" and run the program. It works just fine.
8. Memory Stick Driver
HotKeys Utility modifications (for Fn Volume and Fn Brightness control). You will notice the Fn keys don't work properly. The on-screen display works but without any effect to the actual controls. With a bit of modification this can be made to function.
1. Go to C:\Program Files\Sony\Hotkey Utility.
2. Right click on HKSERV.EXE and select PROPERTIES, then the COMPATIBILITY tab.
3. Apply Windows XP (SP2 or SP3) Compatibility mode and check "Run this program as an administrator" then click OK.
4. Do the same for HKWND.EXE
With both of the files modified, the volume control will work perfectly. (Thanks to S22S for this ingenious find)
My S170 specs: Dothan 2.0Ghz, 1GB RAM, 60GB HD, ATI 9700.
Win7 runs very smoothly along with Aero. I haven't encountered any issues after applying this workaround. I've borrowed a few ideas from members on this and other forums. Adding my experiments to their great advice and ideas, this has worked. Coming straight from Windows XP, this feels like a whole new world to me, yet familiar. My S170 is my primary computer and I haven't had to look back after this install. Good luck and enjoy your S series like it was brand new again. Post any problems and I will try to assist.
NOTE: Fn + F7 will not work. Possibly due to Sony Control not working. No problem, there's an excellent alternative = Winkey + P