I typed sudo dd if=/dev/sde of=/dev/sda7/Atari/ conv=swab, but only got a message telling no such file or directory.
You got it nearly right -- you should have typed something like "sudo dd if=/dev/sde of=$HOME/atari.img conv=swab", i.e. write it to a file. /dev/sda7/Atari doesn't make sense -- sda7 is a partition, you can create directories on a filesystem only.
Always know what are you doing with tools like dd else you may end up with huge data losses!