heres a tip
browse your SD card on a PC, on the root of the SD card will be a folder called "media" inside this one, if its not there already, make one called "audio" and inside that one, make two more, one called "notifications" and another "ringtones"
any audio files you place into these folders will show up as available ringtones when you select a ringtone or notification sound.
and I mean they will show up in the same list as the default android ones.
thats how I keep my custom 'tones seperate from my music collection.
if it doesnt work right away, try a media scan in Dev Tools app in cm7. should be similarly named if it isnt that. it will be in app drawer.