Damn, I am sorry to say we might just not support Win 7 any more. It sounds like setuptools or some other library that updated in the background now uses python 3.9 tech, or similar, that Win 7 won't do any more. We have known this was coming for some time, so perhaps it has finally hit us. I will update the help to talk about this.
It might be possible to get things to work on old libraries if you were to build your own requirements.txt and go through the advanced/manual version of the 'running from source', as here: https://hydrusnetwork.github.io/hydrus/running_from_source.html#what_you_need but I am quite experienced at this and I would find doing that quite a pain in the ass, so I think your best bet would be to just roll back to v578 and halt there for now.
I am not the world's best git expert, but (I'm assuming you used git to download the hydrus source) if you open a terminal in your source folder and run this:
git checkout tags/v578
I think that will rewind you, undoing any git pull you just did. It may be that v582 or later works for you too--the tag should line up with the tag in the URL of each release, as here: https://github.com/hydrusnetwork/hydrus/releases Sometimes it will be v123a with the 'a' on the end when I had to do a hotfix.
Good luck, and let me know how you get on.