I've been experiencing the same crash when the swirley battle thing comes. It freezes up for around 2 seconds, then the music starts playing (the screen stays black), and the FF7.exe has encounteered a problem ... error comes. I have RivaTuner and it has 8-bit textures enabled. Here are my specs (I've had it continuing to randomly crash like this since I started):
CPU: AMD Athlon XP 1800+ (OC'ed to 2000+)
GPU: NVIDIA GeForce4 Ti 4200 with AGP8X
RAM: 512mb
MODS: High Res, 1.02, FFVIIXP 1.4, FF7Music, Minigame Patch (dzuigo)
Is it because I have the FFVIIXP 1.4 patch installed? Or is it something else.