Playing Diablo 1 on Windows 7
This may sound weird (and I have actually done this to play Diablo on my Win 7 laptop), but right click on your desktop and click on Screen Resolution. Leave that open and then run Diablo.
Notorious problem I'm afraid. Not so much missing software but you'll have a version of DirectX so advanced it's incompatible with early games. Some users have had luck running Diablo using Compatability Modes for Windows XP or earlier, or even Virtual Machines/DosBOX or equivalent, so you could try those first?
It's now possible to play Diablo through your web browser : https://d07riv.github.io/diabloweb/ .
Details about the project - https://github.com/d07RiV/diabloweb .
It allows you to provide path to original Diablo files on your disk so you can play game legally.