Increasing the RAM should not affect system software version 7.0. This
problem may be related to a third-party system extension (INIT) conflict.
Try removing all third-party system extensions (INITs), control panels
(CDEVs), and DAs from your System Folder for testing purposes. Then
reinstall the system software. If the problem is corrected, isolate the
conflicting software by reinstalling the system extensions, control panels,
and DAs one at a time until the problem reappears. Remember to allow an
appropriate testing time between each installation.
If the problem persists, try zapping the PRAM by pressing and holding the
Option-Command-P-R keys and restart your Macintosh.