It is probably downloading it, but the drivers are jacked up. There is a new version on sprint's website, from what I've been told, and supposedly the drivers are fixed. If you can't get that one,(I don't have the link, sorry) then install the one you have AND PDAnet. PDAnet has the correct drivers, and can force sync to work. There is also a workaround that has hit or miss success.
I had the same issue as I put Win 7 64x on my PC the same day it was released from Microsoft and HTC had no support for it. The HTC Sync program would download and install, but it just would not recognize the Hero.
I finally downloaded the zipped drivers from a third party site, unzipped them, and then manually copied them to my HTC Driver folder. It has been working like a charm ever since. The RUU update copied flawlesssly too.
I have thought about updating the Sync program with the new release, but if it ain't broke...........
like I said, I think there is a new version, I just don't want to search for it. Mine works, so I'm being lazy. It took me about a week to get mine to work, initially. I'm no computer savvy kind of guy, though... lol