I am a self -Employed. I was about to file my Income Taxes when I noticed on my 2007 W-2 Wage and Tax Statement that nothing was deducted from my 2007 paycheck for Social Security and Medicare Taxes. I'd soon found out that I was put on SS & Medicare "EXEMPT" by mistake when we set up our Payroll Processing with the ADP Payroll Services. What's my best option? To whom should I notify regarding this error and dire situation? Please advise..

I don't think that claiming Exempt on W4 makes any difference.
Are you sure you received W2? Or is it 1099-Misc?

How you will treat the 1099-Misc income, read: Your U.S. Tax Return: W2 or 1099: Employee or Independent Contractor. (http://taxipay.blogspot.com/2008/03/w2-or-1099-employee-or-independent.html)