Thanks for your help. I now have multi touch and as suggeted I updated all the applications and drivers (with exception to original drivers).

My question is, should I also download the "original drivers" for my PC on the HP site cause they aren't really described as updates like everything else?

I still can't get the touchsmart webcam tile to activate.

I still cant find where to download and add touchsmart canvas.

My touchsmart videos tile still refuses to show thumbnail previews.

Any other ideas that could help?

UPDATE: Thanks to everyone for helping get everything to work. I now have canvas, webcam, multi-touch, recipe box, and all other issues have been resolved. My update to windows 7 from vista is now complete!!!! Everythng works just great. I will say that I didn't use every single approach stated in this thread to solve my problems but 90% of my issues were solved right here. later, I will post some links of the other threads in this forum that helped me, along with anything else I feel can help others in the future, should they run into the same problems. Again, THANK YOU!!!!!!!!!!!!!!!!!!!

PS.... The only one I haven't tried yet is the "Touchsmart Link" app. Is it worth the trouble and what is it exactly?

Ok, so here is how I solved all my issues.....

1. Multi-Touch - On the HP site under "software/drivers" I searched my model PC (IQ816) and software (windows 7 64 bit). Than, under "Driver - Display" I downloaded the driver called "NextWindow Multi-Touch Device Driver Update."

2. Preview Thumbnails for videos in touchsmart 3.0 - Don't know exactly why it started working but I assume it had something to do with updating all my applications and drivers that were available on the HP Site mentioned above. 

3. Canvas - Well prior to recieving the reply by "ACIDFORUM" on this thread to "manually" install the apps I found a thread on this forum that helped me first, titled "Touchsmart 3.0 Bottom Tile Help! Getting canvas/recipebox and notes on older touchsmarts!" Here is the link.

 http://www.touchsmartdevzone.com/forum/thread/2002/Touchsmart-3.0-Bottom-Tile-Help-Getting-canvas-recipebox-and-notes-on-older-touchsmarts/?highlight=canvas

Anyway, to sum up, at first I donloaded the app from the HP site. It downloaded just fine but I could not add it in touchsmart 3.0. The link above tells you to find the xml for the canvas app that you download, most likely in the folder, C:\HP\TS\DefaultAppSettings. Than copy the xml to the folder, C:\ProgramData\Hewlett-Packard\TouchSmart\SmartCenter 2.0\UpdateAppSettings. This worked like a charm for me.

4. Recipe Box - I used the same formula as in canvas however recipe box was not available for download for my model pc on the HP site like canvas was. So I used the link provided by "Acidforum" in this thread. Both work, however my question is that should I start over with canvas and recipe box and "manually" install them as "Acidforum" suggests? Will I have issues with those programs unless I do manually install them? I will say that my only issue with canvas is that it will not transfer every single picture properly. Some pictures are just a black square, rectangle, ect... Is this because of the way I installed it or do some types of photos just not work in touchsmart?

5. Web Cam - This program was not available for my model on the HP site. When I used the link provided by "Acidforum" it would not successfully download like Canvas and Recipe Box. So this time, I did follow Acidforum's instructions and manually installed the app. I used the link provided titled "How to install Recipe Box" as a guideline as well. Everything worked fine until it was time to register the app by using command prompt. The register failed everytime. I searched in the thread "How to install Recipe box" to see if anyone was having the same issue. Sure enough, on the bottom of page 1, I found an answer. I than followed the advice from the thread and manually registered the app. I did this by once again finding the xml for the app (if you manually installed the app the xml "bottom" will be in the folder you extracted) and this time I coppied it into the folder, C:\ProgramData\Hewlett-Packard\TouchSmart\SmartCenter 2.0\DefaultAppSettings. And than it worked.

 So there you have it.