Where should the .vimrc file be located on Windows 7?

From the Vim Wiki.

In Vim, your home directory is specified with $HOME. On Unix systems, this is your ~ directory. On Windows systems, the best way to find the value of $HOME is from within Vim, as follows. These commands are useful to see what directories your Vim is using:

:version
:echo expand('~')
:echo $HOME
:echo $VIM
:echo $VIMRUNTIME

Once you determine the HOME variable put the vimrc file within that directory.

If you would like to change your HOME variable, set HOME as an environment variable for either the system or user.

Computer > Properties > Advanced System Settings > Advanced > Environment Variables > User | System Variables.

Windows (both Native and Cygwin*) will use _gvimrc, .gvimrc, _vimrc and .vimrc in that order of priority. The gvim* files will be checked with the gvim process, while the console vim will only check the vim* files.

*: verified against vim 7.2 and 7.3

For Vim 7.4, these are the paths it looks for on Windows

   system vimrc file: "$VIM\vimrc"
     user vimrc file: "$HOME\_vimrc"
 2nd user vimrc file: "$HOME\vimfiles\vimrc"
 3rd user vimrc file: "$VIM\_vimrc"
      user exrc file: "$HOME\_exrc"
  2nd user exrc file: "$VIM\_exrc"
  system gvimrc file: "$VIM\gvimrc"
    user gvimrc file: "$HOME\_gvimrc"
2nd user gvimrc file: "$HOME\vimfiles\gvimrc"
3rd user gvimrc file: "$VIM\_gvimrc"
    system menu file: "$VIMRUNTIME\menu.vim"

As Darren Hall said, use these commands to find out the values of $VIM and $HOME.

:echo $HOME
:echo $VIM

For example, one good place for gvim-specific settings would be

C:\Users\MyUsername\_gvimrc

If you need to find out just from a .bat file first look in the %HOME% directory. If that is not defined then vim/gvim looks in the path defined by concatenating %HOMEDRIVE% and %HOMEPATH%.