I got my All-In-One to work with 1.7, but the support is defintiely more consistent with 1.6.
One thing that I noticed is that 1.7 doesn't want to "try as hard" to connect, it gives up a LOT sooner. And retrying (click on the "disconnected" tag) is possibly not trying at all.
I was able to get 1.7 to connect by exiting CF and coming back in. 1.6 has it's issues too, but generally just one retry within the app is all it takes.
I reported a couple of bugs around OBD support this morning, one of them dealt with CF 1.7 not being able to clear a CEL. From that, and the general connection issues, I think David's trying to speed up the protocol by reducing a couple of delay times. That's hard to get away with in the ODB II world. The timing is long so that anything from a screaming P4 to a small PIC.