Ive never heard to avoid certain chords in Bach Chorales, all i was taught was how you harmonise the chords, and proper movement from one chord to another, and writing out cadences for four voices properly.
And yes, you do have to prepare a 7th. Its lots of bother putting in a 7th, because that affects 3 chords rather than one. In the first chord (the one before the seventh chord) you need to "prepare" the seventh.. which basically means you sound it. The next chord is your seventh chord, and the chord after is your "resolution". 7ths always resolve to the next chord. I was only taught dominant 7ths (i only had to do cadences in the course) and you have to resolve it by putting the 3rd of the seventh, up a semitone to the tonic of the I chord.
But anyway, use all the chords you want for now, because i think you should get good at simply writing them properly with regards to cadences and voicings.