Driving a Fan using TIP120 to PWM from Arduino
There are several problems with your circuit:

2N2222A is inappropriate for this application.  You are trying to control power, although you didn't say what current this fan takes at 7 V.  A hovercraft fan sounds like it would take some power, so let's say 1 A to pick something (since you didn't specify anything).  That's more than the little 2N2222A can handle.

Your circuit doesn't have enough gain.  You didn't say what the digital logic level of this arduino pin 9 is, but let's say 5 V when high.  Figure 700 mV for the B-E drop, which leaves 4.3 V accross the 1 k&Omega; resistor.  That will only provide 4.3 mA base drive.  To support 1 A collector current, the transistor would have to have a gain of 233.  Maybe some parts in the bin will do that, but it's well beyond the guarantee.

This problem is even worse at 3.3 V logic or with a proper power transistor.  You mentioned TIP120, but then are using 2N2222A for some reason.  That makes no sense.

The flyback diode is in the wrong place.  The problem is that the fan acts like a inductive load.  You can't shut off current thru a inductor instantaneously.  When you try, like when your transistor switches off, the inductor will make whatever voltage is required to keep the current flowing, at least in the short term.  In your case that means raising the collector voltage to the point the transistor conducts anyway, which is bad for the transistor.

Put the diode in reverse accross the fan.  In normal operation it doesn't conduct.  When the fan is abruptly turned off, it gives the inductor current a safe place to go until it dies down naturally.

Use a Schottky diode instead of the ordinary silicon diode you show.  Schottky diodes have very fast reverse recovery time, essentially intantaneous for your application.  That means the switch won't get beat up and you won't waste current when it is first turned on but the flyback current is still circulating.  This can easily be the case when a motor is driven with PWM.



To fix this, replace the 2N2222A with a IRLML2502 FET and connect the PWM output directly to its gate.  There is no need for a resistor between he PWM output and the gate.  These are great little FETs as long as the voltage doesn't exceed 20 V, which it doesn't in your case.  Don't forget to fix the diode before you change the transistor, else you'll be changing it again.