its all solved, I read half a dozen threads here with the issue and in one of them a guy worked it out and I will explain here to help others.
Basically in some movie scenes FF7 cuts out the music and it does this by lowering the midi volume to mute, in vista (and windows 7) there is no midi volume control so what happens instead is ff7 actually turns down all sound to mute and hence the no sound.
There is a solution luckily, I downloaded and installed a virtual midi app and then assigned midi to that app in ff7config. That app has its own volume control so ff7 will no longer touch the main sound control by accident, and I also now have decided to use ff7music since the soundcard in my windows 7 laptop is aweful for midi. Its now all working quite well, the only issue I get is sometimes a pause before music starts but is minor, the game isnt crashing and my fmv sounds play properly now.
this is the app download page.
http://www.nerds.de/en/download.htmlI didnt work this out was another guy who posted on the forums helping someone else and I am very grateful to him, as well as to everyone involved in ff7music.
OS is windows 7 I been playing it on, 64bit edition. Am very pleasantly surprised that was the only major issue I had.
Shoukd I disable emulate ramps in ff7music? I dont seem to have any issues but if its a known problem that might affect me later I will turn it off.