I'm not sure what you mean. Windows 7 is still supported, but I haven't used it for many years, so it's possible some things are broken, as I can't really test it myself. If you have any issues with it, you should report it on GitHub.

As for the renamed dll, one possible reason is that some security software adds ddraw.dll to the KnownDlls key in the Windows registry, which prevents all ddraw.dll wrappers from being loaded from the game directory. Supposedly, the Chinese security software "360 Total Security" is one of the culprits, based on this comment:
https://github.com/FunkyFr3sh/cnc-ddraw/issues/263#issuecomment-2035998859

Though as far as I remember, this issue can be worked around by using the InjectDll shim.

I'm not sure what you mean, but DDrawCompat doesn't make any permanent changes to your system. Have you tried rebooting your PC?

of course. It's like the graphics got downgraded. They are less sharp and the it's almost like there's a haze over the screen. Also, the splash screens for wow are no longer full screen, just like the issue in HOMM 3.

If by "no longer full screen" you mean that there are black bars on the left and right side of the screen, then I already posted the solution to that for HOMM 3 in my first reply to this topic. Read it above.

I'm certain your issues with WoW have nothing to do with DDrawCompat however, and probably not even with HOMM 3 in general. All major GPU vendors allow you to set your display to be scaled by your GPU according to your preferences. See these articles for example:
AMD: https://www.amd.com/en/resources/support-articles/faqs/DH3-019.html
Intel: https://www.intel.com/content/www/us/en/support/articles/000058312/graphics.html
NVIDIA: https://www.nvidia.com/content/Control-Panel-Help/vLatest/en-us/mergedProjects/nvdsp/CS_Display_Scaling.htm

As for visual quality of WoW, I cannot comment as I don't have the game, but I'm sure it has nothing to do with HOMM 3 or DDrawCompat. Something else must have changed on your system.

If you're talking about the visual quality of HOMM 3, then check the DisplayFilter setting as I suggested in my first reply. If you don't like any of those options, then put "DisplayResolution=app" in DDrawCompat.ini. In that case, both the display filter and the aspect ratio will depend only on your GPU or monitor, depending on which one is doing the scaling.

Offtopic, but I just find it funny that we are total opposites in this regard. The streched image you call terrible is the only way I can/ will play Heroes 3 untill the end of time. It's probably because that's how I played Heroes 3 since I first ran across it somewhere in 2001 - 2002. The compressed image you prefer looks horrible for me, everything looks like it's been elongated a bit on a vertical axis, battlefields and town screens look compressed and distorted, and, the worst thing for me, everything is atrociously tiny, I have to squint or use a magnifying glass the figure things out on the map. It's the main reason why I never play HD mod, despite a lot of tinkering, I can never get it to look right, every time everything is too tiny. Only time I ever use HD mod is when other mods require it to run. I hope I don't sound mean with this post, I just found it funny how display preferences can be on total opposite ends of the spectrum.

Once again. First of distortion come from video driver and display. Set one to integer scaled keeping aspect ratio. Thats the first step. If display have aspect/size modes experiment with it (start from Reset+Auto on the Desktop). Some have exaxt same option to keep aspect or stretch. Set it Keep in that case. If it have predefined 4:3/16:9 - try 16:9. Maybe even 4:3 would look worse for your case. 16:9 set only by display will he disproportion as well of course, no miracles. But much less than by video driver.

Video driver set to stretch blur screen a bit. Also vertical lines can appear. And for some 2d games - including subj game - ingame sprites/textures been stretched become another one "vertical lines" that wasn't supposed to how textures smust looks like. In any case never ever set video driver to stretch. It always make screen more "soaped" blured.

And stretching set by video driver make every else - display, games, wrappers - keeping aspect setting work only worse.

If you want stretching you can edit ini file of included DdrawCompat wrapper. That is best way (without 3rd party downloading).
Also you can try Heroes 4 included GOG DX Wrapper. There is setting tool allow to stretch the image.

Of course if you just get used to stretch - that would be Keep ratio disproportion for you at first (i know, i tried go in both ways, and i have netbook with non-standard widescreen display that only way to use is set to stretch). But not reduced screen quality, no. For what you said looks like its still issue of system/display set. And of course whatever you get used to, proper proportions are only 4:3/12:9, by fact.

Fkr user above it seems video driver get updated and some setting mess - come along wtih Windows OS update installed. No game, wrapper, included compatibilities preset by sdb batch file can mess with whole system preset.
Although... Can GOG mess with system DirectX files during installation? Never happened before. I doubt Win allow that even in admin mode. Right? I have no idea what it can be and why system not fault entirely. GOG just include Jun 2010 DirectX package inside setup. Like most of the distribution clients since the doll of Windows time.

WoW are not Ddraw game anyway...

Well, I guess one's preferences can be formed by what one is used to.
I first played the HoMM and other games on an old 4:3 monitor, so nowadays I always go for black bars and correct aspect rario.

Yeah, nostalgia is the defining factor in all of this. Heroes 2 is the first game in the series I ever played, and to this day and age I still consider it the best one, mostly because of the nostalgic fuel it provides.