It is encouraged you to import a save from Wizardry 6: Bane of the Cosmic Forge for the best experience. You may even have multiple saves to ensure all the starting choices are covered. Unfortunately, it isn't clear from the game how to actually import the save file, although reading the manual helps.
Locate the install folder for Wizardry 6. The SAVEGAME.DBS file will be found in the BANE folder. Steam and GOG both have a quick menu option to locate the game folder.
Rename the file from SAVEGAME.DBS to SAVEGAME.BCF.
Locate the install folder for Wizardry 7. Typcially, it can be found in a folder named DSAVANT. Steam and GOG both have a quick menu option to locate the game folder.
Copy the SAVEGAME.BCF to the Wizardry 7 folder.
Open Wizardry 7 and choose IMPORT (BANE).
Leave the path alone as it recoginizes the current open location as C:\DSAVANT.
(If somehow running this from DOS, choose your install folder.)
Just press Load to begin the game.
Creating a New Character
If you decided to create a new character, you are looking to experience the new races, or you never finished Wizardry 6. Once again, I encourage you to import your save from Wizardry 6 as it will give the best experience.
Wizardry 7 has a group of six default characters if you want a baseline experience, but it will be a challenge and doesn't give any of the new races. You will get two fighters, a thief, a priest, a mage and an alchemist. Better than Wizardry6's default characters but not the best option.
There is no right or wrong party; although a party of all fighters is a poor choice but can work if played right. I'm not going to list all the options, but a well-balanced party often works best. If you want an unforgettable challenge, try completing it with only a Faerie Ninja (not six, just a party of one) to explore Guardia. A party with the best chances of success takes careful planning and repetitive creation. In my opinion, a party consisting of three hybrid-fighters (Lord, Valkyrie, Samurai, Monk, Ranger or Ninja), a bard, a priest and a mage has the best chance for survival. Other spellcasters, like Psionics and Alchemists, are helpful but not versatile enough to be used alone.
Your first choice is to name the character, then choose the character's race. While this does make a little difference, there is nothing preventing any class and race combination.
Once you select your race, the next step is to choose your gender. Sorry, only a choice of male or female is available. Males will start with the base levels, and Females will have -2 to STR and +1 to PER and KARMA.
At this point, a hidden dice will roll and provide bonus points to put into your stats. Getting too few bonus points will limit which professions are available. If you don't get enough points to choose your preferred role, select any option, quickly complete it and cancel the creation to start again. You may need several attempts before you can successfully create your character.
Next, you choose your portrait. It doesn't matter which race you selected earlier; you can choose any face you want. If you want your male Dragon to look like a female fairy, choose away! Depending on how many bonus points you rolled, you can now distribute the remaining leftovers throughout your stats.
Is your character a magic-user? If yes, now you choose your starting spells. You can only choose a few spells to start, so check all the spell types to learn the ones that will help you the most at the start of the game. You will learn more as the game progresses.
You can't add points into Karma as those get randomly provided after you finish creating the character, which is often the pain point of many players. Karma doesn't do much in battle, but it will affect how NPCs like you. If they are low Karma characters, they will be friendlier to low karma characters. High karma NPCs will also prefer high karma players, so having a mix in your party can be helpful.
Only once you go through all those choices can you choose if you want to save or discard the character. If your happy with your choice, save the character. You'll need to repeat the process until you have created all the characters in your party.
Building your party
To assemble your party, choose Add Character from the menu screen, select which character you want to have, and press OK. As you add characters, the order you add each party member will place them in the party from top to bottom. This order represents the front and back of your party, so add your stronger characters first, then magic or ranged characters last.
Once you added your party, press OK to return to the menu. Options to review party members or dismiss them will now be available. You can take from one to six members. Choose Start New Game to begin with your selected party.
Depending whether you are importing or starting new will change your starting location. The walkthrough will give you all the different starting areas and where to go from there.