I guess Excel 2007 is natively installed on the machine before using the Excel 2003 ThinApp.
How are you deploying Excel 2003 ThinApp?
1. If you are using MSI, it will automatically register the ThinApp, thereby the file associations (.xls) will be overwritten from Excel 2007 to 2003.
2. If using EXE, have you tried registering the ThinApp using THINREG utility? This will do the file association for you.