I wonder if the problem with your lens is optical or IS related. One way to tell would be to mount the camera/lens on a tripod with IS off and take a shot at 1/200s. If you get a sharp image, then the IS may be malfunctioning. You may just have a bum lens.
Have you tried another 100-400 on your 7D? Perhaps take your 7D to a camera store and see if they will let you take some test shots using a new 100-400.