Yes, 7-Zip is free software. You can use it on any computer. You don't need to register or pay for 7-Zip.
You probably used a *.* wildcard. 7-Zip doesn't use the Windows system wildcard parser; so, 7-Zip doesn't follow the archaic rule by which *.* matches every file name. 7-Zip treats *.* as matching only a file name with an extension. To process all files, you must use a * wildcard or just omit the wildcard entirely.
The current version of 7-Zip cannot change an archive created with the solid option switched on. To update a .7z archive you must create and update the archive in non-solid mode (-ms=off switch)
Support for ACE can be implemented, if the source code of that format is made available, and if the source code license will allow using that code.