Hi Frank.
I'm not sure I understand you. When you say "layer mask", do you actually mean "Quick Mask"? If so, you may just need to tweak your Quick Mask options.
Unfortunately, I don't have PS7 - I'm using CS3 - but I think the process may be the same. Here's a guide to altering the settings:
Photoshop CS3
If it's not a problem with Quick Mask, and it's happening with all images, trashing your
PS Preferences file might help. That process is described here:
Photoshop Tips: Trashing the Preferences File | CreativePro.com
Hope this helps.