Okay, I'm having a similar problem (I'm probably the other person EQ2Alyza mentioned), and the first issue I'm having with this fix is that I don't see anywhere to download ProudClod as an executable, or otherwise in a form I know what to do with. I can download what appears to be the source code, but what the heck am I supposed to do with that?!? That probably strikes some here as a stupid question, but I am not a programmer or developer and haven't the slightest clue how to get from there to an executable file.
Scratch all that. Didn't notice at first that the title itself was a Sourceforge link.
Further edit: Doing as instructed above, ProudClod gave me the error message "Unable to load DLL 'zlib1.dll': The specified module could not be found. (Exception from HRESULT: 0x8007007E)" By the way, as a suggestion for whomever develops ProudClod, it would be nice if error messages like that could be copy/pasted (I typed that in by hand).
It appeared to correct it anyway, and at first I could launch my saved game with no apparent problems, but the first time a battle started FF7 crashed with an error message starting with "Oops! Something very bad happened." This was true whether I went back into the mythril cave, or went the other way and attempted suicide by Midgar Zolem. In addition, both the materia slots and materia themselves in my weapons became invisible, while unused materia in the menus were visible but tended to be the wrong colours.
Further edit: I have tried re-running proudClod with the zlib1.dll in the right place, and it gave a different error saying a parameter was out of range. I chose the option to continue. This had no effect - my game is still unplayable. What can be done about this short of reinstalling everything from scratch?
(In addition to the issues noted already, it also turns out I can't change equipment, in case that helps diagnose the problem.)