I’m afraid I cannot help much here because I have not seen these effects at my installation. But perhaps the following tips might help a bit:
For Windows 7, the tools version is 4.1.68.1, too. Earlier versions of the tools, like 4.0.1.3, won’t work under Qubes R4.1, which is probably the case as you describe it. For tools installation, please see Installing and Using Qubes Windows Tools in Qubes R4.1.
Windows Tools require Windows 7 SP1 with all updates; there are updates to the servicing stack which were published after SP1, and if these updates are not installed prior to QWT installation, the installation will fail.
For Windows 10, try an installation without the Xen disk and network drivers, just including the base drivers. In my system, installation works with version 21H2 and earlier versions; I did not test it with version 22H2, but upgrade from 21H2 to 22H2, with QWT installed, works.
Windows 7 VM upgraded to Windows 10 probably won’t work at all.