Hello liveswimmer
Very sorry to hear that you have hit this issue as well. I did not expect Win7 64 bit Users to have the problem since I am using that OS myself. As with all software on Windows, only an Admin can install it. However, I think you have already done what can be done to get the emulator to work. The App Inventor update is not far away from release but it is not ready as yet.
So, what to do. You could use a 3rd party emulator which runs on Windows just like the AI one does. BlueStacks is popular and free:
BlueStacks Emulator Install
2) Install BlueStacks on Windows. Note: Like App Inventor, Bluestacks requires the User's Google Account.
Testing an App Inventor App on BlueStacks
1) In App Inventor, select Build, App (save .apk to my computer)
2) Run BlueStacks, click "My Apps"
3) Drag and Drop your App Inventor App .apk onto BlueStacks - it will self install
Note that BlueStacks is often used to play multi-player games so you might need to keep half an eye on your students :)
...also, your "Exit App" button does work in BlueStacks.