David, Store requires at minimum one shipping method (irrespective of whether the product is tangeble, downloadable, etc...), and that the same configuration be attached to the product (A product has to have atleast one shipping method attached to it else the said error). Without this minimum configuration, you will get the said error. To avoid the error go to Store Admin and scroll all the way to the bottom and under "Shipping Administration" create atlease one shipping method as follows:

Description: Unit Shipping
Minimum Weight: 1.00
Maximum Weight: 9,999.99
Cost: 0.00

Hit "Update Shipping Rates"

Now for every product you create put the "Weight" as "1" (by doing so we attached the "Unit Shipping" method to the product). These configurations will get ride of the error you are getting.

Next, flat shipping rate can be achieved using two different ways:
1) Create another shipping method or modify the default one and set the price to 7.95. Attach the Weight of this shipping method to all of your products.
2) In Store admin when you scroll down there is something called "Surcharge (Fixed)" - out here enter the value of 7.95 - but for this one your shipping method should be set to default as outlined above ($0.00); else you will land up charging twice to your customer.

Store sums the surcharge and shipping method cost and shows it as "Shipping and Handling" on the confirm order screen.

Hope above helps,

Sincerely,