I think that this approach is correct. After all, to a 7 year old, Satan,
Dracula, Boogy Monster, etc. are all the same.
If you want some more clarification on the subject, here it is.
Satan is the name of an angel. This angel was created by G-d (just as
everything else). The job of the Satan is to entice us into transgressing
the commandments. Therefore you are right by stating that the Satan will
make your life miserable. The Satan is also the accusing angel. He will
make you sin and then accuse you in from of the heavenly tribunal.
We all have a small 'Satan' inside us, the Yetzer Hara (evil inclination)
that also pushes us to sin. This Satan is so smart, that he will even push
you to do a mitzva. Why? So that then you can feel real good about it and
be filled with ga'ava (ostentation, haughtiness).
The Satan is not a monster. It has no interest in scaring people. On the
contrary, it wants to befriend people.
So how do you defend yourself from the Satan?
The easiest way, Study the Torah, say Tehilim and perform Mitzvot.
The hard way: Refrain from saying anything bad about people. Even if you
think that they have done something bad, try to find an excuse for them.
This way, if we don't say anything bad about other people, then G-d will
not allow the Satan to say anything bad about us.
Hope this helps.
Joseph I. Ceasar
CLS Computer Solutions