I have successfully used the Windows 7 XPS Document writer for quite a while under windows 7 (64 bit).
Now however when i try to print i get prompted twice for the output file name and then get different error messages depending upon the application being used. e.g. Notepad gives a 'The I/O operation has been aborted because of either a thread exit or an application request'.
I have disabled and reenabled the XPS facilities of windows features and have similiarly removed and readded the printer. But the end result is the same.
I've uninstalled all applications i have installed since the time when i know it worked but this also has not made any difference.