What? No, that's not how this works. 7H is a memory injector. Have you ever played Skyrim mods, or any other game mods, from the Nexus using the NMM? It's the same concept. The files inside of the .iro are pulled out and temporarily injected into memory during gameplay. This leaves the game folder completely unmodified no matter which mods you download or options you change.
The Pack/Unpack tool is for modders who are creating and transferring their mods to the .iro format for compatibility with 7H.
The reason your movies don't work is because you didn't set the correct path during either A) The Game Converter when it asks you to set your movie path OR B) Workshop -> Settings -> Movie Path is not pointing to the movie path that was set during the Game Converter. Movies have a registry edit, so you MUST set these paths correctly or else the game can't communicate with your computer on how to use them.