I'm a user like you, not an employee of IDM. I don't know who created the BP7 configurations. And I don't have Borland Pascal 7 nor any other Pascal compiler. I have just experience in setting up environments for different compilers, first done for UltraEdit, and since release of UEStudio for UES. The first configuration I used myself was the DJGPP configuration, written by another user. I needed 10 minutes to setup my project and it build the first single project quite fine, although I needed also to set the compiler path to the DJGPP directory in the "Set Compiler Paths" dialog. I had warnings on my first compilation because my DJGPP version was newer as obviously the one used by the creator of the configuration and therefore DJGPP told me with a warning to use a newer option instead of the deprecated older one, but I could quite easily change that in the configuration.
However, I suppose you use the "Win16 Application" configuration because this BP7 configuration is the only one containing "CW". The important sections are:
COPT = -CW -B $(Alignment) $(Full Boolean) $(80x87) $(Stack Checking) $(Instructions)
PATH = $(CPATH)\BIN
Out = $T
Depends = $FGP
ReleaseFlag = -$D- -$L- -$K+
DebugFlag = -V -$D+ -$L+ -$K-
Cmd0 = bpc $(Compiler Options) $(COPT) $R $FGP
The CPATH variable should contain now already the path to the BP7 directory (in 8.3 format!) which contains the directory BIN in which there should be a bpc.exe. All the compiler options defined for COPT are appended as options to the build command. I don't now where /$CW really comes from. According to what I see in the configuration that should not happen.
The configuration contains also a [Show Makefile] section. Therefore you can run from within UEStudio Build - Run Commands - Show Makefile to get in UEStudio opened the makefile used to compile your Pascal project. Perhaps you see in the makefile what is wrong and where is the reason.
You can also enable in Build - Advanced Build Options the option Show build commands when executing to see in the output window also the commands used during build process.
Of course all that output is only helpful when you have the manual for the compiler and will make use of it by reading in the manual.
Best regards from an UC/UE/UES for Windows user from Austria