This is a bit off-topic, but despite your best efforts, you are probably not using the latest version of Arc. Sounds like you've been following the instructions at http://www.arclanguage.org/install for the whole time you've been posting here, and those are out of date by almost two years, even linking to a version of Arc 3 (one of a few Arc 3s, I think :-p ) instead of Arc 3.1. I think this is a better starting resource: http://sites.google.com/site/arclanguagewiki/.
Old versions of Arc needed to run on MzScheme 372 because it was the last MzScheme with mutable lists, but now Arc 3.1 uses some pointer manipulation to mutate lists behind Racket's back, meaning any version of Racket is fine. However, this actually introduced a rare garbage collection bug, if you can believe it. ;) That means there is actually a legitimate reason to keep using MzScheme 372, but as described at http://sites.google.com/site/arclanguagewiki/arc-3_1/known-b..., pretty much every Arc setup besides the official one avoids this bug, and it's possible to patch the official one too.
Anyway, you're the first person I've heard of who's tried Arc on Windows 7 (which isn't to say there aren't Arc Forum lurkers in the same position ^_^ ). If you encounter Arc-on-Windows-7 stumbling blocks, please continue talking about them like you have in this thread!
The -m option means to call the "main" function now. Just leave it out. It used to mean "--mute-banner", which suppressed the "Welcome to MzScheme" line.
That "racket -f as.scm" command is the right one. The 'setuid issue is one of a few known issues on Windows, and it has a known fix: http://arclanguage.org/item?id=10625.