Could you ensure that the game has actually been updated, do this by checking the version number in the top right hand corner of the intro screen. It should say 7.0.1 if it doesn't that will be why it doesn't load the edited database.
Also could you ensure that the edited database is in a subfolder of C

Documents and Settings\Name\My Documents\Sports Interactive\Football Manager 2007\db and not in that folder. Because the game will look for any sub folders of the db folder, and try to load databases from these sub folders. Also check if there is an xml file with the same name as the database sub folder, as the game will check some settings in that xml file before it will load the database.