To have any sense of what went wrong with your attempt, we'd need to know more about just what you attempted:
http://support.microsoft.com/kb/555375
CM7 comes in many flavors.
1. SD card or internal storage?
2. What steps or method did you try to use (links)?
3. What version(s) of CM7 did you try--last stable 7.0.3, Release Candidate 7.1, one of the nightly test builds, or other?
One frequent cause of problems is a corrupted download somewhere along the way, which can be addressed by erasing the old file, downloading it again, and giving your process another try. If you're using ClockworkMod Recovery to flash the CM7 update .zip, make sure you got the latest version, CWM 3.2.0.1.
If you got your instructions from blogs or YouTube videos, they often include a mish-mash of links, some of which will get updated regularly while others disappear entirely. Actual developer threads tend to be kept more up-to-date. These are the most 'standard' threads currently:
For installing CM7 to internal storage:
http://forum.xda-developers.com/show....php?t=1030227
To install on a removable SD card:
http://forum.xda-developers.com/show....php?t=1000957
I'll generally read the first page and last page or two if the thread has 150+ replies.
Good luck.
P.S. XDA is generally a better resource for info on any kind of 'hacking' of the NC.