Same happened to me too, i was unbeatable in GT4, lapping in sync with the best (according to GTPlanet circa 2006..) and once i started to drive with Race07 i was miles behind. I've catched the mainpack in +3 years but the top is forever lost.. That won't stop me trying..
If you ask from the serious simracers like the pros from iRacing, they will no doubt consider Race07 as a simracing title so it's not just this game that will give similar results, it's all of them.
One of biggest changes for me was the gameplay, i got used to the fact that if i was 2nd and the top three were lapping with similar times but if i spun, they suddenly started to lap 3 seconds slower.. Here, no one is waiting, the rubberband is completely gone. If you make a mistake, be ready to drive alone long periods of time. In 40 minute races it's not uncommon to not see anyone for 20 minutes of the race time. It makesa completely different game play where the start is hectic, then we do some racing, then we drive alone. So in terms of excitement, it's a dropping curve. But that makes the wheel to wheel full races that much special, i've literally been shaking for 15 minutes after a particularly tough race. Also starts are so much more nerve wrecking adn the knowledge that the feeling is similar in other cars around you, makes it even worse.. This is mostly mental game and i've grown to love it.
Also the setups in simcades (half arcade / half sim like GT series, Forza, NFS Shift etc.) are not based on real life. I don't like that Race uses these arbitrary values of 1-20 in suspension while i know that it could show the real values.
My advice is to leave the setups alone for now, use the factory defaults for any given track. When you're driving in addon tracks, try to find a similar track from the game content and use that. What happened to my setups was that first i set it up like in GT, didn't work. Then studied one parameter at a time, the setups got wildly different than factory until one fine day i was forced to drive the factory setup again (thank you Friendly Development Series, look it up, it's worth it..).. And suddenly i was faster with default setup, not even the track default, just with default out-of-the-box setup, the car was stable, it turned, it braked....
Now if i drive WTCC i touch three things, steering lock, brake pressure (to fit to my wheel/pedals) and possibly differential power/coast to fit to my driving style.. People here are very helpful but i never use the setups as they usually are too far from the factory defaults and suits only one type of driving style. If you find someone who has a similar style of setups you need and he's posted a lot of them, you're in luck.