Do rankings from one season carry over into the next season?
Nope, everyone starts fresh.
I have a record of 7 wins-1 loss right now, but the player above me has 3 wins-4 losses. I'm just trying to figure out why that is.
The ladder doesn't rank based on a straight win-loss record. The ratings of the players who were defeated are taken into account, too. See http://wiki.warlight.net/index.php/Ladder_Ranks_and_Ratings