You need not run ANY files after using the game converter. FF7Config is already run during it, and that's the only time you should configure those settings. If you run it after the game converter, you are overwriting the registry keys with the wrong ones and will cause issues. If you want to run FF7Config more than once, just rerun the game converter again. Likewise, you do not need to run ff7.exe ever. Always use the Launch Game button in 7H to run, otherwise you are just running the vanilla game with nothing modded.
About your drive labeled FF7DISC1. The game has to input a registry key to the proper drive labeled FF7DISC1 in order for it to play without using any discs. If you change from a flash drive to a virtual drive with the mounted ISO, then rerun the game converter and make sure it recognizes the new drive. For the most part, it does it all for you, but you can always check the GC.log afterwards to be sure.
The no music only happens if you haven't downloaded the Music and Sound category from the Catalog. This is because the new custom driver being used sets the music folder to [gamedir]\music\vgmstream which is not the default folder for music. If you go into the [gamedir]\data\music_ogg folder and move the music files to the music\vgmstream folder, you will get music again. This file move will be done automatically with the next game converter release.
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Everyone, this is kind of a broken record post for me. I've explained this all numerous times (Jvms20 don't sweat it, you didn't know
), so make note of this post and just revert people to read it rather than having to explain the same things over and over.