I also need some assistance with this (I bet I was here for the same reason x years ago...).
I've followed most links here, and though I haven't checked my progress very often (mom's laptop + XP = crashes(scary), yo), last I remember I had no success. I just started a new game to check up on some of these fabulous little mods (FF7Music, Phoenix Rejuvenation Project, and some other small patches). Now, the ff7.exe in question is straight out of the patch .zip and poked and prodded with cetra.
When I first unpacked FF7Music, it went straight into FF7's main directory (later moved to \ficedula). I have TWO different versions of FF7M: 1.10 and 1.51a. Never mind how the music is set up- lot's of spaces in the filenames, of course, but otherwise of doubtful relevance - but the older version had this handy log-window that reported FF7.exe as FOUND, but ff7music.dll as NOT FOUND. The newer version has no such output, and both simply don't work as I want them to.
Kurses! ff7music.dll v. 1.1.1.0 is in the main (ff7.exe) directory, NOT in \ficedula. ficeconsole.dll v. 1.5.0(+) and the other one have copies BOTH in \ficedula AND 'Final Fantasy VII'. Though the .ini came with the older version of FF7Music, I have adjusted it to conform with the new parsing-wizardry (the first time I ran the new exe, it parsed the spaces as full stops... ouch!). If I have to do it over, I will hate any number of things... Bloody tedious...
Psst! (Filecount: 91)
Why the [insert Barret-tirade here] doesn't it work??