how to get Outlaws by Lucasarts to work on windows 7 ?

You could try running dos box and running the game from there.

All of the early Lucas games like pod racer and such were programmed in 16bit. They only work with 95-98-Me. They simply will not run in a 32 bit environment.
 
Not entirely true. Most of the early LucasArts games used 16 bit installers, but the games themselves were actually 32 bit applications. You have to use a custom installer to install a lot of these games on a 64 bit OS. You can find some fan made 32 bit installers for some LucasArts games here. You can try Google and search for a custom installer for Outlaws if it is a Windows based game. If it can run on DOS, just use DOSBox to install and run the game. That's how I got Star Wars: Dark Forces to work on my 64 bit Windows 7.
 
Thats a good thought. I would love to get Jedi Knight Dark forces and dark forces 2 running. That was the first FPS that really caught my intrest. Remeber how awsome it was to force pull the guns out of the storm troopers hands so they would just run around doing nothing?