LCC is a C compiler only, not a C/C++ compiler combo like Visual Studio et al. To get C++ you have to install a separate C++ compiler that is supported by your version of MATLAB, e.g. from the list here:
http://www.mathworks.com/support/sysreq/files/SystemRequirements-Release2007b_SupportedCompilers.pdf
Microsoft Visual C++ 2005 Express is listed on the page for 32-bit Windows MATLAB, so you could install that one.
Another option that sometimes works is to copy the mex support files from a later version of MATLAB (do you have any?) to the appropriate directories in your older version of MATLAB. E.g., in your case you might need to locate the files from R2008a or R2008b that support MSVC 2008 and copy them to your R2007b directories.
