These articles may help...
Link and
LinkSpecifically this section from the second article...
"What changes were made to the DirectX runtime for Windows 7?
Windows 7 includes all of the DirectX runtime components found in Windows Vista, and adds Direct3D 11, DXGI 1.1, 10Level9 feature levels, the WARP10 software device, Direct2D, DirectWrite, and an update to Direct3D 10.1 to support 10Level9 and WARP10. For more information, see Graphics APIs in Windows.
All other components are identical to Windows Vista, with the addition of 64-bit (x64) native support for the core DirectMusic API related to timestamped MIDI. The performance layer of DirectMusic remains deprecated, and it is only available to 32-bit applications on Windows 7 for application compatibility. Note that 64-bit native support of DirectMusic is not available on Windows Vista."
In short, you should be able to run DX 10 games...I'd check the compatibility mode for Vista SP2 in the game exe's properties section. I'd also consider upgrading your GPU because it's getting a bit dated...you'll soon have major issues with future games and 640mb of VRAM is nothing nowadays.