Well, I have no idea how this happened.
I was just about to enter the first fight with Reno, and a little message pops up telling me that "something very bad has happened."
It has written an error log into a massive 508MB crash.dmp file, and supplied this app.log report:
INFO: FF7/FF8 OpenGL driver version 0.7.8b
INFO: Auto-detected version: FF7 1.02 US English
INFO: Intel Mobile Intel(R) 4 Series Express Chipset Family 2.1.0 - Build 8.15.10.1840
INFO: OpenGL 2.0 support detected
INFO: Found swap_control extension
INFO: Max texture size: 4096x4096
INFO: Original resolution 640x480, window size 640x480, output resolution 640x480, internal resolution 640x480
INFO: No errors.
INFO: FFMpeg movie player plugin loaded
INFO: FFMpeg version SVN-r21874, Copyright (c) 2000-2010 Fabrice Bellard, et al.
INFO: FF7Music helper plugin loaded
LOCK UNLOCK TEST
MATRIX INITIALIZE
INITIALIZE DD/D3D END
initializing sound...
creating dsound primary buffer
reading audio file
loading static sounds
sound initialized
set music volume: 127
set music volume: 127
Entering MAIN
Exiting MAIN
START OF CREDITS!!!
INFO: C:\Program Files\Square Soft, Inc\Final Fantasy VII\movies\eidoslogo.avi; rawvideo/null 364x353, 15.000000 FPS, duration: 0.066667, frames: 1
INFO: 24-bit PNG loaded (C:\Program Files\Square Soft, Inc\Final Fantasy VII\/mods/textures/cr/opback_a_00.png); this is slow, please convert to 32-bit
INFO: 24-bit PNG loaded (C:\Program Files\Square Soft, Inc\Final Fantasy VII\/mods/textures/cr/opback_b_00.png); this is slow, please convert to 32-bit
INFO: 24-bit PNG loaded (C:\Program Files\Square Soft, Inc\Final Fantasy VII\/mods/textures/cr/opback_c_00.png); this is slow, please convert to 32-bit
INFO: 24-bit PNG loaded (C:\Program Files\Square Soft, Inc\Final Fantasy VII\/mods/textures/cr/opback_d_00.png); this is slow, please convert to 32-bit
INFO: 24-bit PNG loaded (C:\Program Files\Square Soft, Inc\Final Fantasy VII\/mods/textures/cr/opback_e_00.png); this is slow, please convert to 32-bit
INFO: 24-bit PNG loaded (C:\Program Files\Square Soft, Inc\Final Fantasy VII\/mods/textures/cr/opback_f_00.png); this is slow, please convert to 32-bit
INFO: C:\Program Files\Square Soft, Inc\Final Fantasy VII\movies\sqlogo.avi; mpeg4/mp3 640x480, 15.000000 FPS, duration: 247.466667, frames: 3712
INFO: No errors.
set music volume trans: 127->0, step=60
END OF CREDITS!!!
Entering MAIN
set music volume: 127
Exiting MAIN
START OF MENU SYSTEM!!!
INFO: 24-bit PNG loaded (C:\Program Files\Square Soft, Inc\Final Fantasy VII\/mods/textures/menu/buster_00.png); this is slow, please convert to 32-bit
END OF MENU SYSTEM!!!
Entering MAIN
Exiting MAIN
Field Start
Field Quit
Entering MAIN
Exiting MAIN
Entering FRAME_INITIALIZE SWIRL
Exitting FRAME_INITIALIZE SWIRL
Swirl sound_effect1
stop_sound
End of Swirl sound_effect1
Entering FRAME_QUIT SWIRL
Exitting FRAME_QUIT SWIRL
Entering MAIN
Exiting MAIN
[BATTLE] Entering FRAME_INITIALIZE
[BATTLE] Scene# 406
INFO: 24-bit PNG loaded (C:\Program Files\Square Soft, Inc\Final Fantasy VII\/mods/textures/menu/coloa_00.png); this is slow, please convert to 32-bit
INFO: 24-bit PNG loaded (C:\Program Files\Square Soft, Inc\Final Fantasy VII\/mods/textures/menu/colob_00.png); this is slow, please convert to 32-bit
[BATTLE] Exitting FRAME_INITIALIZE
INFO: 24-bit PNG loaded (C:\Program Files\Square Soft, Inc\Final Fantasy VII\/textures/Spells/seffect/seffect1_00.png); this is slow, please convert to 32-bit
INFO: 24-bit PNG loaded (C:\Program Files\Square Soft, Inc\Final Fantasy VII\/textures/Spells/eskill/jo_b04_00.png); this is slow, please convert to 32-bit
[BATTLE] Begin main battle loop
INFO: 24-bit PNG loaded (C:\Program Files\Square Soft, Inc\Final Fantasy VII\/textures/Spells/seffect/seffect1_08.png); this is slow, please convert to 32-bit
INFO: 24-bit PNG loaded (C:\Program Files\Square Soft, Inc\Final Fantasy VII\/textures/Limit/tifa/hit_1_00.png); this is slow, please convert to 32-bit
INFO: 24-bit PNG loaded (C:\Program Files\Square Soft, Inc\Final Fantasy VII\/textures/Limit/tifa/hit_1_02.png); this is slow, please convert to 32-bit
[BATTLE] End of current battle
[BATTLE] Begin end battle stuff
stop_sound
[BATTLE] Entering FRAME_QUIT
[BATTLE] endof battle.
[BATTLE] Exitting FRAME_QUIT
Entering MAIN
Exiting MAIN
START OF MENU SYSTEM!!!
END OF MENU SYSTEM!!!
Entering MAIN
Exiting MAIN
Field Start
cross play music: 0
set music volume trans: 127->0, step=4
set music volume: 127
Field Quit
Entering MAIN
Exiting MAIN
Entering FRAME_INITIALIZE SWIRL
Exitting FRAME_INITIALIZE SWIRL
Swirl sound_effect1
stop_sound
End of Swirl sound_effect1
Entering FRAME_QUIT SWIRL
Exitting FRAME_QUIT SWIRL
Entering MAIN
Exiting MAIN
[BATTLE] Entering FRAME_INITIALIZE
[BATTLE] Scene# 412
[BATTLE] Exitting FRAME_INITIALIZE