OK I will clarify this subjest since there seems to be alot of confusion about the "Magic Counter" Materia. It seems that the group is leaning towards the posted reply from "Fergusson" which is incorrect. Rather, he IS correct about the materia "Counter" located in the Crater on DIsc 3. However, this materia that he is referring to is not "Magic Counter". Let me explain...
In FFVII there are THREE types of countering materia, one of which is the pink "Counter Attack" rather easy to get.
Now the others are "Counter" and "Magic Counter"...
The matiera "Counter" IS located in the crater as pointed out by Fergusson and a few others however is NOT the same as the "Magic Counter" because A) Magic Counter pairs with a Green or MAGIC materia or a Red; SUMMON Materia. The other Materia "Counter" is paired with a Yellow COMMAND materia.
Now, the locations. "Counter" is in fact in the crater, but "Magic Counter" is not. You must get the "Magic Counter" Materia by winning it as an item in Chocobo racing at Gold Saucer. It is not one of the gifts that Esther gives you, basiclly you HAVE TO WIN IT. I know I'm a newb on the site but I can assure you this information is correct. Sorry to bring back an old post but it was never really clarified.