Why won't bitcoind work correctly on windows 7? When I go to bitcoind using "bitcoind -daemon" in Windows 7, it won't run in the background. When I type that, it just sits there and does nothing. If I keep it like that and open another command prompt and use eg. "bitcoind getpeerinfo" , it says it can't get a lock on some directory.
What are you expecting it to do?  It is a daemon (server) that is waiting for RPC connections on port 8333.

Your bitcoin.conf needs to have configured the rpcuser and rpcpassword.  Then you can access the bitcoin API.

With Bitcoin-Qt version 0.7 and higher, the Debug window gives you access to run a console, so you don't need to run bitcoind if you are just trying to execute some commands interactively.