"Did I overcontribute and do I have to pay the penalty?"
Assuming that you were eligible to contribute $7,000 to the traditional IRA, no, you have not made an excess contribution. The amount that you converted to Roth has nothing to do with whether or not you have made an excess contribution. There is no limit on the amount that you are eligible to convert to Roth from a traditional IRA. Assuming that you have no other funds in traditional IRAs, $7,000 of the conversion will be nontaxable and the $5 gain will simply be taxable as ordinary income, calculated on Parts I and II of your 2025 Form 8606.
