From the description provided by you, it seems that you are using a YubiKey 2.X whose configuration slot 1 is programmed to OTP mode and configuration slot 2 is programmed to static password mode.
If you touch and hold the YubiKey button between 1-3 seconds before releasing, the first configuration slot will emit the password (based on slot 1 configuration). And if you touch and hold the YubiKey button about 4-5 seconds before releasing, the second configuration slot will emit the password (based on slot 2 configuration).
We would appreciate if you can touch and hold the YubiKey button about 5 seconds before releasing and try to generate static password from the second configuration of your YubiKey on Windows 7 laptop.
If you are still facing problems, we would appreciate if you can provide us following information:
1) Download and install the YubiKey configuration utility from the link given below:
http://www.yubico.com/developers/personalization/
Plug your YubiKey in the USB slot. Start the YubiKey configuration utility and click on "Next". Under "Testing the YubiKey" section, select "Check the YubiKey type and firmware version" and click on "Next". Here if you see that the YubiKey type and Firmware version are listed then the YubiKey is working fine. Please send us the YubiKey type and Firmware version information.
2) The hardware information about your computers i.e. CPU, Keyboard make
3) Keyboard layout configured in your Windows operating system