I think the problem of it restarting when you change rooms is caused by having the midi disabled. But honestly I can't really remember how I fixed that anymore.
Also if you deleted all the files in the midi.lgp or any of the other midi LGP's I think that also causes it because FF7Music isn't a standalone program. So when you change rooms, the midi needed isn't technically running so the ff7 program searches for it all over again.
Hope this helps or provides some kind of insight
EDIT: Actually, this did fix the problem! I restored the midifiles in midi.lgp (copied over the ontouched copy from the disk), and now the music no longer restarts upon zoning. Now, however, the sound volume is extremely low - barely audible. I'll keep fiddling.
EDIT 2: My hard-to-hear audio was obviously the result of poor sound set-up on my end. I just had to change some devices around, so now it's all good. The game is running just as perfectly as it did a year ago, with enhanced 3D models, higher resolution, and my own, custom soundtrack playing to my ears' great pleasure! The only problem I see now is that now that I'm on a widescreen monitor, the image doesn't quite cut it for me, but that's a topic for another forum thread.