Your problem does not sound like a host OS (Win7 vs XP) problem. I doubt that using XP will make a difference.
What is specific to Win7 (as well Vista) is (depending on the settings) files in the c:\program files folder protected.
So if you have installed CodeWarrior or MQX into the default program folder, that might cause all sorts of problems.
That's why always install things inside my own folder outside program files (e.g. c:\freescale).
About atoi() itself: yes, looks like this is indeed a register/parameter passing problem.
I suggest that you file a service request in any case so someone from the support team could have a look at your issue.
BK