Scott-bc and PeterW
You are both exactly right. The S7-200 does run STEP7 and doesn't run STEP7. How does it manage this? You've just entered the magic world of marketing where anything is possible.
Siemens decided that all their PLCs would be called S7-something. There are three families: the S7-200, S7-300 and the S7-400. And the software to program them would be called STEP7-something.
Now in practice the S7-200 has as little in common with the S7-300 and S7-400 as a competitor's PLC. It might as well have been designed by a totally different company. Ooops, it was. It was actually designed by Texas Instruments around the time Siemens bought TI.
And the S7-200 programmming software, Micro/Win, is equally different to the S7-300 and S7-400 software, SIMATIC Manager. But of course the marketing guys insist that it has to fit in the family so they called them STEP7-Micro/Win and STEP7 SIMATIC Manager respectively.
Experienced hands around these parts tend to refer to the S7-300 and S7-400 software only as STEP7 (or sometimes something worse!), and refer to the S7-200 software as Micro/Win. Hence the confusion etc.