Yes that one will work and it'll work wiht the correct chain line since you're replacing all the stuff.
That's pretty pricey considering it's the "old" Octalink stuff and the external cup setups are all the rage now. I've seen some places selling the old Octalink stuff for just over 1/2 the price BikeUSA wants.
Shop around some more. Hell, Jenson's has an FSA Mega EXO external bearing crank and BB setup for $90. That's a major upgrade and a nicer setup for $40 less than the one in the link. And that's all just from one quick check.
Look at Jensons, Nashbar, Performance and Cambria. There's others as well. You can find links to them either with Google or in the listing of online shops at
www.mtbr.com .
Don't worry about using 7 speed chain on 9 speed rings. It'll work just fine. The only other issue is that most all modern MTB cranksets use big rings that are 44 while yours is 46. Unless you often speed along on the 11 on the rear, big ring on the front and find yourself wishing for more it won't be a problem.