Shift Click works fine and does what it should as you say.
With Shift click if you choose the first and last items in the list it highlights both of those and every item in between.. which is fine and how Shift click is meant to work.
However, Ctrl and a click should let you select single cats from the list..so you can choose 4 that are not next to each other or whatever... and that is what doesn't work for me, either on my site or yours.
My IE7 is being used with XP.. and according to Microsoft it is their latest one - as they are offering no updates for it...so it should be the one the majority of users of most sites will be using I guess.
That search you link to shows the correct 11 results and your fix for that initial problem seemed fine to me.
If you can't use Ctrl and click to select cats then how would you select 4 cats here and there in the list to search? Shift click is no good for that is it.
I noticed Vbulletin just had to release fixes because of changes in how IE7 is working with their software...which makes me suspect it may be the same sort of thing at work.