If I understand properly, CMS 7.0 was installed and working fine. But you changed the password of the Active Directory account used as the Application Identity. When you changed the password for this account, the NS kept attempting the old password, and the Active Directory account became locked. So many logs are being written that you can't figure out what's going on.
Is that right?
If so, stop all Altiris services on your NS. Reset the password of the application identity account and be sure the account is not locked out. Right-click each Altiris service on the NS and have it use the new account and/or password. When the console opens, update the application identity password within Settings.
I'm not sure if you'll be able to do the last step if you're locked out, but it's worth a try.