Blueknavish,
This problem is mentioned in the
HD Movies Thread.
There is no standard solution to make the FMV's work on every system.
This issue is most likely an incompatibility between your system and the OpenGL driver.
Try using an older version of the mpeg driver such as the one included in the 0.7.8 OpenGL archive.
Update your codecs with a comprehensive pack like the K-Lite Codec pack. The decoder is already included in Aali's driver so this
should have no effect.
Make sure your monitor's refresh rate is set to the correct value, usually 60Hz or 120Hz. Sometimes Windows forces 59Hz and this causes problems.
Update your video card drivers to the latest version.
Run Windows Update and install all of the current updates.
This issue is most likely driver related. Focus on updating all of your hardware drivers to the most current. Stop all unnecessary programs from running. Disable multiple displays. Close Explorer.exe via a batch file before running FF7. I'm throwing every trick at this now. It will
eventually work if you can just find the conflict.
Hopefully this issue will disappear with the forthcoming OpenGL driver.