How to prevent stacking of windows in the Windows 7 taskbar?

Open Taskbar and Start Menu Properties (right click on the taskbar and select Properties).

Under Taskbar appearance, select "Never combine". As more programs and windows open, buttons decrease in size and eventually scroll within the taskbar.

You can also select "Combine when taskbar is full" option. So when the taskbar becomes crowded, programs with multiple open windows collapse into a single program button.