She's Komomo, a main character of the manga series Watashi no Ookami-san and its sequel Dear, both by Fujiwara Cocoa (author of Inu x Boku SS).
Komomo is a level 0 hero and poor, and also the love interest of the demon lord. The "dog" with her here is Ume, and is the demon lord's messenger/minion. Ume has the ability to spit up women's clothing and to easily devour things well beyond his/her size.
The fan artist likely styled her appearance off of Youmu (in her normal style she doesn't seem very Youmu-ish). Komomo apparently was created before Youmu though, as Watashi no Ookami-san is listed as being released in 2001, while Touhou 07's release is listed as 2003 with a trial out in 2002.
As for tagging, the series Dear has all the main characters from Watashi no Ookami-san and some new ones, so it seemed easier to use the sequel's name instead of the first one. Watashi no Ookami-san is also only 2 volumes long, while Dear is listed as 12 volumes long.
