I'm not entirely sure that you're actually running your game in hardware mode, the only obvious difference between my rig and yours is probably I'm running old omega drivers 66.93 due to a chipset conflict for my mobo. I'm running Win XP Sp2 too, and I could run the movies fine in hardware mode.
Could you post a screen of your config for the ff7 gfx settings? Also, if u ever update your drivers, DO use drivercleaner. And as for what drivers to use, 78.05 seems to be the best bet, 81.85 is problematic for the 6xxx series of cards. While you're at it, the optimized drivers at ngohq are way better than the stock nvidia drivers.
(I'm pretty sure its not a driver issue, but I wrote it just in case you do want to change drivers, post that screen and I'll see if I can help... No gurantee though.)