I had this same issue when I used a save game created with the Remix Remastered Kernels with Menu Overhaul.
Even after restoring clean kernels, loading the save game with the Menu Overhaul installed resulted in the bug.
When I examined the Guard Materia, it was maxed out with stars all across the screen.
EDIT:
I used a clean 1.02 ff7.exe and vanilla kernel.bin, kernel2.bin and scene.bin files when I reinstalled Menu Overhaul.
It's something that happens to the save game.
It happened to me after the 2nd disk. Everything was fine until disk 2.
I downloaded a save game from disk 2 created with a vanilla game, and it works perfectly with Menu Overhaul.
The damaged save works fine without the Menu Overhaul. Installing Menu Overhaul exposes the issue.
I read in a thread that there was some issue when terminating materia with 00 instead of FF (or maybe vise a versa) that resulted in the Guard materia problem.
I haven't found the thread again. But I'd guess that a missing terminator is allowing the game to read parts of the Menu Overhaul code.
At one point a distorted items menu would open over the materia slots when I attempted to insert a materia into a weapon.
But, I really know nothing about how it all works.
I do know how to prevent it from happening again!
I now avoid using Menu Overhaul with other kernel mods and I've never had the problem reoccur.
