Why isn't my Scheduled Task running a batch script?

I wonder if you aren't running into the problem of CMD.EXE not being readable by non-Administrator users when not running as "INTERACTIVE" (or "BATCH" or "SERVICE"). This is a a new default in Windows Server 2003. Take a look at this Microsoft KB article for some details.

Soudns like your issue is with 7zip itself, I actually have a very similar process setup myself except I am running the scheduled task as a System User with Admin credentials. As FortyPoundHead states the exit codes are going to be very instrumental in resolving this. Also, I would add some logging to your batch file to see where it fails, to see if it receives an error with 7zip etc. Without some kind of logging you are going to have a hrad time troubleshooting this issue.