Are you using a laptop? In the 1997 version of FF7 PC, the default buttons are mapped to the Num-Pad:

To get around that, you'll need a file called ff7input with the keys mapped to different buttons (this file gets generated when starting a new game for the first time, it's basically your custom keys + sound settings). I don't know if you can just use someone else's file, but just in case try this one:
http://www.mediafire.com/download/ae637gtp7hcntt0/input.zipUnzip that folder and drop the ff7input file into the Final Fantasy 7 folder (the one that contains a bunch of other folders called data, etc). If it does work, then it'll map your buttons to the keyboard to the settings that I have:
WASD (movement)
HJKL (Square/Switch, Confirm, Cancel, Menu)
YUIO (L2, R2, L1, R1)
Enter/Space (Start, Select)
With that you should be able to start the game and set your own button preferences through the Config screen in the party menu. Just remember to have the option set to 'Custom' rather than default otherwise the next time you start the game it'll set the buttons back to the num-pad.