I wouldn't doubt this. For the next update, I have removed some files from MO that were unnecessary. The files removed do have the potential to mess with the battle encounters.
I don't know why your movies file is empty. If you do a full install, then the original movies (.avi files) will be there. The downloads are inside [gamedir]\mods\7th Heaven, so you can save them before doing a reinstall. I don't recommend this though because the next update is changing the file compression and will require everyone to download the Catalog again. Pain or not, there is no way of avoiding it.
Did you not use the Game Converter from STEP 1?
It's possible for now, but I've removed files that were unnecessary for MO in the next update. The files removed can cause wrong battle encounters, so hopefully the next update fixes the issue.
I have the original 1998 PC Game, they are 4 CDs. FF7INSTALL, FF7DISC1,FF7DISC2, FF7DiSC3.
To install the game I need to run FF7INSTALL disc, and the Full Installation says this "Installs every data about the game in your hard drive. Movies will run from CD-ROMS"
So, I don't know what can I do :C
Another problem encountered besides no-movies (just seeing black screens with audio) on the first fight there is some ninja girl that Insta Kill me, I re-installed multiple times and always keep that error, so that's why I left trying on 7th Heaven, and needed to go back to Bootleg
PS: You were never inactive on Qhimm :O ? I made a tutorial for bootleg back on 2012, and then u made it super pro haha I still remember that haha