It's about context. In the first sentence you are simply stating a fact about what happened to you in the past. The second sentence would be used in relation to some other event or moment in the past, so saying it to this way sounds a bit strange. But, if you "I had been living in London for 7 years, when I met my future wife". Then, the second sentence make sense, because you would be talking about the period of time before you met your wife to be, as well as the fact of meeting her.

They are both correct but have slightly different uses. I lived in London for 7 years - past simple, used to talk about a completed action in the last I had been living in London for 7 years - past perfect continous used to talk about how long an action continued in the past before another action in the past So it might be something like: I had been living in London for 7 years before I met my partner. Or I had been living in London for 7 years before I started to feel homesick.

Live means the past =you don't live there anymore. I have been living = you still live there. There is one more sentence..I have lived, which means that it is something steady, longer..you would use it with 15 or 20 years for example.

*lived