Problem Unable to Set any printer as default in Window 7.

In case you are unable to set any printer as default

do the following

Be very careful when working directly with the registry. I do not take responsibility for any consequences. (end of disclaimer)

The fix,

Go to HKCU\Software\Microsoft\Windows NT\CurrentVersion\Windows\ -If the Windows key doesn't exist, create a new key;

Then check for the following entry (or create it if it is not there)
Name: Device
Type: Reg_SZ (String Value)
Value: winspool,Ne00 <-- if there is anything else there, change it to this value.

Should you be unable to save it, just make sure the user has Full (or special) access to the Windows key (by right-clicking on the key).