Magento 1.7 Error – How to Diagnose ‘Invalid Block Type’ Error

Check for anything in all files, before the starting <?php and if the file ends with an ?>. Remove the trailing ?>. No one needs this.

This error is often raised, because you added a space before the stating <?php

And I think in later PHP versions, they improved the error by adding the information where the output started. Think about updating php to know this.

Ok so I am not sure if this is the bug but if you compare the Magento 1.8 and Magento 1.7 versions of the function currency in Mage_Core_Model_Local you will notice a reference to a bug with Zend_Currency

Magento 1.7: Mage_Core_Model_Local->currency

/**
 * Create Zend_Currency object for current locale
 *
 * @param   string $currency
 * @return  Zend_Currency
 */
public function currency($currency)
{
    Varien_Profiler::start('locale/currency');
    if (!isset(self::$_currencyCache[$this->getLocaleCode()][$currency])) {
        try {
            $currencyObject = new Zend_Currency($currency, $this->getLocale());
        } catch (Exception $e) {
            $currencyObject = new Zend_Currency($this->getCurrency(), $this->getLocale());
            $options = array(
                    'name'      => $currency,
                    'currency'  => $currency,
                    'symbol'    => $currency
            );
            $currencyObject->setFormat($options);
        }

        self::$_currencyCache[$this->getLocaleCode()][$currency] = $currencyObject;
    }
    Varien_Profiler::stop('locale/currency');
    return self::$_currencyCache[$this->getLocaleCode()][$currency];
}

Magento 1.8: Mage_Core_Model_Local->currency

/**
 * Create Zend_Currency object for current locale
 *
 * @param   string $currency
 * @return  Zend_Currency
 */
public function currency($currency)
{
    Varien_Profiler::start('locale/currency');
    if (!isset(self::$_currencyCache[$this->getLocaleCode()][$currency])) {
        $options = array();
        try {
            $currencyObject = new Zend_Currency($currency, $this->getLocale());
        } catch (Exception $e) {
            /**
             * catch specific exceptions like "Currency 'USD' not found"
             * - back end falls with specific locals as Malaysia and etc.
             *
             * as we can see from Zend framework ticket
             * http://framework.zend.com/issues/browse/ZF-10038
             * zend team is not going to change it behaviour in the near time
             */
            $currencyObject = new Zend_Currency($currency);
            $options['name'] = $currency;
            $options['currency'] = $currency;
            $options['symbol'] = $currency;
        }

        $options = new Varien_Object($options);
        Mage::dispatchEvent('currency_display_options_forming', array(
            'currency_options' => $options,
            'base_code' => $currency
        ));

        $currencyObject->setFormat($options->toArray());
        self::$_currencyCache[$this->getLocaleCode()][$currency] = $currencyObject;
    }
    Varien_Profiler::stop('locale/currency');
    return self::$_currencyCache[$this->getLocaleCode()][$currency];
}

My suggestion would be to try updating the try catch to match that of Magento 1.8 (I know this is not the best solution and obviously I would not suggest editing the core files but adding a rewrite)