For problems like this, the first step is to assume the state of the diode. Is it conducting or not?
Once you assume a state, then you redraw your circuit to match the assumption. For example, if you assume the diode is not conducting, what can you replace it in the schematic with? How about if you assume it is conducting (hint: remember you said it has a voltage of 0.7V)?
After making these assumptions, re-drawing and solving, one of the solved circuits will result in a contradiction with the original assumption. Perhaps you calculate the voltage drop across the diode as something smaller than 0.7V by using KVL around the loop formed by R2 and R3. This contradicts the diode being at 0.7V when conducting, which means that assumption was wrong.
The circuit that doesn't result in any contradictions is the correct assumption, and the values from that circuit are the "right" answer.