We use to have a term when I was an IT person called "bleeding edge" , this term was used to describe computer users that had to have have the latest version of software they ran, its not a negative term, in fact quite the opposite - you want to have the latest version of security, drivers, and software version that are stable, where you dont want to be bleeding edge is when you are upgrading from one operating system to another, its actually a pretty big and sometimes risky thing to do. Let the bugs get found out and let someone else do the beta testing and then see about upgrading later, at least thats my approach.
I can only speculate on why your seeing this issue now. All the information online I see says the i3 7gen processor are not supported by windows 11, there is mention that it is possible to do a clean install ( upgrade from 10 to 11 is not possible like you were able to
) of windows 11 on some 7gen machines but then windows updates will not work so you would running unsupported which is no good for a new OS. Seems to me they may have found too many issues with the 7gen processor and are now doing checks and not allowing installations with this processor but thats just my guess. Annoying situation, specially since you had windows 11 running but what can you do? Even if you managed to get it running now youre running a pretty new OS that is going to need security and stability patches that you cant download. Stay with Windows 10, at least for while longer I would say.
I am staying on windows 10 myself, at least for another year, it has support until 2025