Which version of 1.7 are you running? (RC1, RC2, RC3, RC4, RC5, or RC6) You do know that this is a developers Release Candidate version and not suitable for production environments right?
Which version of Internet Explorer are you using? (9 or 10?) I believe that someone else already reported this so if you search the forums you may find what their solution was.
I am facing a issue. I want to upload the attachments to a directory rather than the database. How can I do that ??
You can't with out modifying those sections of the code back to the 1.6ST version. You would of course have to do this manually yourself.