To install the Loopback Network Adapter you need to run the "Add Hardware Wizard". However control panel on Windows 7 does not provide you the icon to start it. What you need to do is then the following:
1. Click Start - Search for cmd.exe, when found right-click on cmd.exe and select "Run as administrator".
2. From the command prompt window, run “hdwwiz.exe“. This will start the "Add Hardware Wizard".