If I am reading the definition of the Form I-797 correctly, it only means you are eligible for an extension (after your first 3 years, for a further 3 years).
Your present H-1B visa has expired.
But the consulates of Spain, Germany and Italy (based on the information found on their San Francisco consulate sites) require proof of a valid US resident visa with ...
Will I be denied entry to Schengen?
No. Your passport and residence card together fulfill the needed entry conditions to the Schengen Area and you may enter through any Schengen Country.
Outside of Austria the 90/180 days rule applies (but is not strickly enforced).