This error would seem to indicate a version of NI-VISA older than 3.0, but that's strange because you should have 3.0 with LabVIEW 7.0. Either way, I suggest you update to NI-VISA 3.1 from our web site and try that one. It has several other Serial enhancements that are worthwhile.
If you are certain you have NI-VISA >= 3.0 and you're still getting that error, an NI Spy log might help. That way we can see what attributes are being set into what state.
Dan Mondrik
National Instruments