When there is a JS error in IE7, the text displayed is not helpful mainly because it says "error at line X" but the line doesn't really correspond to anything if you start including multiple javascript files.
Is there an option or add-on that could maybe improve this?
All that I have found helpful is turning on the debugging. You can then sometimes step through the code to the problem. It seems to be hit or miss though, as to whether it actually works or not.
I haven't found anything in IE7. However, if you have the option, IE8 + web developer toolbar makes it a lot easier, as the web dev toolbar includes a javascript debugger. Most of the time I see the same errors in IE 7 and 8, so debugging them in 8 usually leads to fixing it in 7 as well.
The only extra detail you can get is by turning on the script debugging. You can do this through Internet Options - Advanced - uncheck Disable Script Debugging (Internet Explorer). This will pop up an alert whenever you get an error and you can see the line of code that created it as well as step through the code's execution.