Hello,
You can do everything that you ask. This is mostly possible because we changed installation technology between your versions of CVI. You can also do this in CVI 7.0 distribution kit now as well, so you can have 2 CVI 7.0 apps running side by side.
Your application will run side by side but you will only have one Runtime Engine on the machine, but it maintains backwards compatibility so you should not have a problem.
You should not have to update the drivers, unless you are using new technology from the drivers, since they also maintain backwards compatibility.
The new distribution kit will update the runtime engine so you should not have to recompile the 5.0 version of you application. You should just work on the 7.0 version of your application
and make sure you can get everything working for it.
Hope this helps,
Jeff
NI