I can't create a book under Internet Explorer 7
Actually, it is an issue that continues into modern versions of IE as well.

If your site has the jQuery Update module running, http://drupal.org/node/860966 speaks of the issue; the real issue is found in comment #6.

The only reason I am following up on this post here is that it is has a high in Google search,  and I figured others are looking for how to solve the issue.