I would also have a look at the starterkits that are on this site, inside a lot of them there are some good sound or audio engines that could be used.

I'm From Melbourne Australia...

The Teams have been alerted and have been looking into the problem.

What modelling package are you using. A common problem with blender is that when exporting the models most of blenders displays show the models with dual faces (Normals on each face), but the FBX Export does not show both sides, it will only show the face with the normals attached. Have a look at this post for some help ...

I would also have a look at the getting started pages in the XNA Documentation as there are some basics there that will help. Also you should make sure that you are drawing the sprites in the correct order, for example the background should be drawn first followed by the charcater sprites.

Moving to the artists corner..

Interesting picture, try posting on image shack or the like so that the page dosn't crash. Also does it have anything to do with XNA and Game development, if not you might get better feedback posting on the blender forums sites, they have WIP Groups.

I have been running windows 7 for a while now and havn't had a problem. Have one notebook with a freash install, and a desktop that was a vista to windows 7 upgrade and neither have given me any problems.

Have you followed the samples and tutorials in the documentation. Doing this will show you the XNA Framework side of things. Once you are right there I would then move into doing the models yourself.

From the look of the texture names they look like the textures from the gamestate samples on this site. But I agree with the others start small and do not worry about developing an engine yet, get the basics right.