our 7 YO daughter walked in on us last night,we both forgot to lock the door.
I'm avoiding her today so she can't ask me questions,while trying to think up a believable lie to explain what she saw.
I hope she's not damaged from what she saw.
You have got to be kidding!!!!!
Don't avoid her and be honest and up front about it. It's what mommies and daddies do when they are in love and how she got here. You'll be surprised to find out she has more understanding about sex than you realize. You don't have to give her the triple XXXX rated version but don't hide about what you do as if what you are doing is somehow wrong and evil. She'll be more damaged if you lie to her than if you are honest and up front about it.
Of course, if you are a Christian than sex is probably wrong, evil, and sinful to you and you will have trouble with explaining it to her which is why you are having a problem with your conscience now. For us Pagans we don't have that kind of baggage so explaining to our children about sex under the conditions you have described is easier.