Originally Posted by converyds
I'm not too familiar with the proper lingo, but I think the rear cassette is the same as the rear sprocket. If this is the case, then the angle created by the chain and the mid sprocket is too great when the bike is put into 7th gear. The chain then, almost naturally, rolls right off the mid sprocket when pedaling. The mid gear range is fine as the chain is perfectly straight, but it's dropping onto the small diameter rings on the rear cassette (sprocket) that appears to be creating the problem.
A rear cassette or freewheel is merely a collection of sprockets and the mid-sprocket is commonly referred to as a chain ring. It would appear from the specs and photo that the Trek Cruiseliner uses a "double" (two chain ring) crankset with the larger, outer chain ring (40t?) being used as a timing or sync chainring and the smaller inner chain ring (36t?) being used as the "primary" drive ring.
If I'm reading your description of the gear combinations and roll-off correctly, when you shift into the smallest three sprockets your drive chain gets pulled off the 36t chain ring to the "right" side of the chain ring and, presumably, falls in between that chain ring and the larger timing chain ring and timing chain; yes?
If that is what's happening my inclination would be to make sure the sync chain wasn't 'lifting' the drive chain off of the inner chain ring. I say this because it usually takes some very severe chain line off-set angles (or a very well-worn chainring) to cause a chain to be pulled off of a chain ring. Teams will routinely ride tandems with fully crossed-over chain lines, i.e., chain on the biggest chain ring and the tallest rear sprocket or in the middle/inner chain ring and the shortest sprocket without any trouble.
So, what this leads me to suspect is that you have a chain line conflict of some sort. Based solely on the description you've provided, and assuming that there isn't a frame alignment problem (which is the first thing I'd make sure the shop checked for), I would expect that off-setting the rear bottom bracket to the right and/or using bottom brackets with wider axles should correct the problem.
Again, this is a WAG. If no one comes in with any better suggestions / solutions / or explanations and your shop is still not able to correct the problem in short order I'd recommend that you contact Trek technical support via phone and see if they're aware of anyone else having similar problems with recently delivered Cruiseliner tandems. Given that these are mass-produced in lots, other bikes from the lot should have similar problems if it was a design, frame fabrication, component spec, or assembly defect. If they have no history with this problem, then I'd really suspect that you simply have a defective / damaged / improperly assembled example that they should be replacing under warranty.
If you can't get it resolved let me know and I can make an inquiry via someone I know who works at Trek in Waterloo, WI.