Try putting this file into data\midi (backup the previous version of awe.lgp first!) and setting the midi device to soundfont mid (awe32/64) whatever in ff7config.
This is a file full of very short blank midi files instead of the proper music, so the game still thinks it's playing midis but they're silent.
I made the file using ficedula's lgp editor - if you look inside it, the file names are completely meaningless so it won't help. The only problem i get is an occasional crash of ff7music, but the game continues. You can switch to desktop and restart ff7music no problem which sorts it out, but would be good if anyone knows a way around this.
Hope this helps - i spent so long trying to get ff7 working on vista x64 and finally it does with good music! Enjoy
go here and download the file
http://homepage.ntlworld.com/jim.daniel/
btw - this is my first post on a forum anywhere - any feedback would be much appreciated!