I'll add to this since I had some trouble getting this to work.
I got errors if I launch the wrapper normally so you'll need to set it to run as administrator. Set up 7thwrapper as you see in Templates pictures. That parts pretty easy. Add FF7music.exe to Also Launch, it's in the ff7 music folder. Then just select what options you want. For this mod you'll need the first three options, the base models are optional and not necessary if you use bootleg. You can also add other mods by just adding an extra file in the wrapped folder, and putting in files with matching game file names. So like if you want to use different field animation files you'd put them in wrapper\extra folder\char.lgp. You'll do the same with Bloodshots new Motorball model, it's already set up this way so just drag in the file inside of the 7thwrapper folder. When you open 7thwrapper your extra folder will be listed, just check it too.
The harder part can be making the game actually open when you hit launch. The game needs to mounted to the D\. So first go into the ff7 game file (games\final fantasy\ff7). Inside you'll see an ff7_cd.exe. Click that and you'll see a command prompt come up. This will allow you to tell bootloader where to mount the game. Type in D and hit enter. Now open bootloader and hit the mount button. If it says it went to the D\ then you're all set. If not you need to open windows Disk Manager. Hit start menu and type Disk Manager, you want the option that says create and edit hard drive partitions. When it opens see if anything else is listed as D. It may currently be your dvd drive. Right click it and select "change drive letter and paths". Hit "change" on the following window. In the drop down menu on the right it'll show the current drive letter. Change it to what ever you like. It'll show a warning when you hit ok. This is only important if you're changing a drive with drive path dependent programs installed. Hit ok and close it out. Now do the same for the games drive and change it to D. The game could work now, but restart your computer first. Now reopen bootloader. Set the drive so it says D. If it's not available hit mount, and check again. Sometimes it'll only show D as an option after it's mounted. Reset it to D and hit mount again. Now reopen 7thwrapper and hit launch. It should work now, if not you may have something else set up incorrectly. You'll need to post your settings in bootloader, and the error 7thwrapper gives you. Always check the drive the game's mounted to first though, if that's incorrect nothing else will help.
Also, you can change the games settings in bootloader. The only option I've found that doesn't seem to work with 7thwrapper is turning on "direct" mode. Also if you plug in a thumb drive or external hard drive that uses the D you'll need to change that too.
Anyway, we have good media on this thread but so much of what you see in the last screenshot comes from Omzy's field pack(backgrounds), which is in turn part of another giant package of customizable mods called Bootleg40.
This is the Facepalmer background option in Bootleg. I've tried all of them and this is the one I'd recommend. If you haven't used Bootleg yet I'd start there, it automatically installs several mods for you and allows you to select other game changing options.
http://forums.qhimm.com/index.php?topic=13212.0 The Improved and Unshaded mod with 7thwrapper works outside of bootleg, so the models you select for the main characters in bootleg are irrelevant as they wont be used when you start the game.