What protection programs including Firewalls, AV, spam blockers and etc do you have running and installed on this machine?
I assume that when you say you "downloaded" to the machine, you mean that you ran the install and install the required ".Net" also?
With the login failing, I would start at your firewall and other protection programs.
Can you post a screen shot of this Error pane?
I have FTM 2012 running of 5 Windows 7 machines, including 32 and 64 bit, Home Premium and Pro versions.
If you have the Starter version of Windows 7, then we may need to look else where.