I was able to resolve the issue overnight. I first backed up the 1.5 fdb file with gbak, then installed FB 2.5 on the WIN7 system and used gbak to restore and convert the fdb file it to a 2.5 version. This works and all seems well.

I think the main problem was that FB 1.5 fbclient.dll was not working for some reason on the WIN7 system and in the end, switching to the 64 bit version of FB 2.5 should be a much better solution.

Thanks again !