It sounds as though the cables from the adapter box have been reversed during
installation.
The top cable (LocalTalk) from the adapter box needs to be attached to the top
connector pins on the Workstation Card. The bottom cable (printer port) from
the adapter box needs to be attached to the bottom connector pins. If the
cables from the adapter box to the Workstation Card have been reversed, the
situation you describe would occur.
Once you were able to see the network from slot 1, did you try using slot 7
again? Were you able to see the network (even with the LocalTalk connector in
the printer port)? Were you able to print from the applications?
Since you were able to see the network (that is, with Chooser.II), yet could
not print, our first suggestion would be to check the printer slot assignment
in the application. The application needs to be set to print to slot 7 if the
Workstation Card is in slot 7.