This is what I did to get the SPL to work from my W7 system:
1. Sync with Windows Device Manager (whatever ActiveSync is called in W7/Vista)
2. With device connected, start SPL (Device shows tri-colors).
3. At first SPL screen, disconnect device (Device still shows tri-colors).
4. At second SPL screen (which says something like - you need to connection, have 50% battery, etc), connect device (ActiveSync might not show connection, but that's okay)
5. Proceed to third SPL screen and finish (Device switches from tri-color to grey with progress bar and should complete with a restart of the device).
6. To install 6.5.1 from CFay, now simply run that RRU.