It's actually not complicated at all. You should use a center tapped transformer which is noted by having 3 wires on the secondary side of the transformer.
I made a diagram for you to show you how to do it. There's really not a more simple way to do it. In fact, it only gets harder. So essentially you have the two red wires with voltage running into the rectifying bridge. For the positive rail (top), the rectifier blocks out the negative AC waves and for the negative rail, the rectifier blocks out the positive half of the AC wave. The end result is 1 rail of positive DC, and 1 rail of negative DC, which is just what your cMoy wants.
The problem is: The waveform is still really wavy, and not suitable for use yet. So to get rid of this "ripple", you put one high capacitance electrolytic capacitor in parallel with 0V (black wire of the transformer "center tap"). You put in one for each rail. You are simple putting one leg of the capacitor on the +7V and one leg on the 0V. And then you do that on the other rail.
The next thing you should add, although not strictly mandatory, but highly recommended, is a small value ceramic capacitor, or film capacitor. Using a 0.1uF ceramic is a safe bet, though you can't really "do it wrong". The reason you put this ceramic capacitor in is because electrolytic capacitors (the 470uF) are really slow. If there is a spike or a quick change in power draw, they cannot react very fast and thus you get crappy waveform. The 0.1uF ceramic makes up for the electrolytics downfall.
(You might also ask...why is it 5VAC on the input and then 7VDC on the output. This is because after rectification, the voltage in DC is roughly 1.41 x Voltage AC.)
Next step is to add a resistor and a LED to tell you whether it's on or not. However, most likely, if you just put an LED in this circuit without a resistor, it would burn out, so you need a resistor to limit the amount of current available to the LED, and thus preventing it from burning out.You can use an LED calculator like this: http://led.linear1.org/1led.wiz
Choose the LED you are going to use, and make sure you know it's forward voltage and operating current. Also know the voltage of the circuit it's going to be in. In this case, it is 14V (the difference between +7V and -7V = 14V). Attach one leg of the resistor to the positive rail (+7V), and the other leg to the positive leg of your LED. Then attach the negative leg of the LED to the negative rail (-7V), (not 0V!)
The 0V is not attached to your LED.
It may seem complicated because I wrote a lot, but trust me, it's not hard at all. When you layout the circuit, you can pretty much copy the schematic for the layout. You don't need anything fancy. I was in your position a while ago too, when it all looks daunting. Just follow the schematic and you'll be fine.
If you are wondering what kind of transformer to get, something like this is fine: http://cgi.ebay.com/12V-Transformer-6V-0-6V-CT-1A-110Vac-12Vac-Chassis-/120736134976?pt=LH_DefaultDomain_0&hash=item1c1c6f3740
I actually own that one. It works well.

Edited by TheLaw - 6/22/11 at 8:14pm