Systems prior to 8.0 require that the HFS filesystem is used. They cannot mount or be installed on HFS+ formatted partitions. HFS has a practical partition size limit of about 2GiB. In some cases, later versions of system 7 (7.6 IIRC) can see HFS partitions up to about 4GiB, but in my experience, things have been very unstable. I think this might be why things are showing up in 7.6, but not 7.5 for you. Multiple 2GiB or smaller partitions are what you'll need to use for System 7. Do ensure any partitions you create are using plain HFS. HFS+ a.k.a. HFS Extended is only supported by MacOS 8.0 and later. It adds support for partitions larger than 2GiB.