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Magento 1.7 Multistore installation needs the following:
1. Remove the existing template for one store and replace with a new responsive theme (theme provided). You may need to completely reinstall Magento since the current theme is customized. However, this store is not in production and other than products/categories, logos and Modules everything else is useless. You can delete whatever you need and reinstall ... just keep in mind that there are two stores and you need to backup and reinstall the other store (no new template install needed for that one)
2. Configure the new template with the logos, images etc. Import all products back in. ensure that the new template is ready for production by testing orders, payment setup, taxes, etc. (The Store should be fully ready after this step)
3. For the other store hosted on the same magento instance, install Stamps.com module or something that works the same . Also install and configure google checkout so that shipping and taxes work properly. Shipping is USPS based on weight and zone (you have already installed stamps.com so it should work with that)