ALchemy (And 3D soundback) solves an entirely different problem, related to 3D audio. This is a MIDI problem.
What's happening is that WinXP and earlier were capable of a program controlling MIDI volume separately from main volume. In Vista and later, they eliminated this feature, but added a feature that allows volume to be controlled by the system on a per-program level. What this means is that FF7 is trying to mute MIDI sound, but instead muting ALL sound for the program.
The best solution I've found is to use
LoopBe and FF7Music. It's not perfect, but it's worked well enough for me.
Also, this topic is a month and a half old. I don't really know what the limit is before posting is considered necro'ing, but I think you hit it.