It is possible to never connect the offline laptop to the internet?
Yes, in fact, it is recommended.
Do I need to update win7 at all?
No.
What about the bitcoin armory client? Needs updates?
There is no need to update unless there is a new feature you want or your version has a bug.
Do you put these updates on a USB drive and update from it?
Yes, you can download the latest Armory client on a separate computer, and update the offline computer from a USB drive.
Where do I purchase my bitcoins without compromising the security of this Armory setup?
You've been misinformed here. Your bitcoin client does NOT need to be online in order for people to send you BTC. You just need a bitcoin address from your offline wallet. If you want to confirm you have received the coins you will need to create a watching only wallet on your online computer.