What error are you getting? Check the SQL Server Error Logs and the Windows Event Viewer logs for any related error messages.
What version of SQL Server 7 do you have installed?
As SoE1100 says, you need to have your server set to mixed mode authentication (SQL Server and Windows) if you are going to use the SA account.
What login does the SQL Server services (MSSQLServer and SQLServerAgent) use? (Right click on the My Computer icon, select Manage, expand Services and look for those services).
If you are only using SQL Server on your local computer and aren't accessing any network files, the login LOCAL ADMIN is good enough for the services. If you are accessing network files, the account needs to be a domain account with access to those files.
Lastly, give the SA account a strong password. Every hacker knows that SQL Server is shipped with the SA account having a blank password. They also know that the SA account is the 'GOD' account.
-SQLBill