This is for the PC version of FF8 ONLY.
It seems like there's only ONE place on the internet that actually tells you the CORRECT method that was endorsed by SquareSoft itself. Unfortunately, I found it only the once about a year ago, and I've been having a helluva time trying to find it again. Luckily, I managed to get myself to remember how to do it.
The most common response I see that could possibly 'fix' it, is the one that involves (re)burning the iso to a disc and then re-installing it to play. However, the REASON I have the ISO is because playing from a disc causes the FMV's to skip/distort as a result of the latency while the drive is reading the CD. Playing from the ISO ripped to your HDD removes the skipping, and you get a nice and smooth playing experience with quicker loading times.
Now, you might ask, "why not just emulate the PSX version instead?" Well, here's my answer: The quality of the FMV's. The PC version of the game has MUCH better (clearer) FMV's. Not to mention that the polygon vertices are much more accurate on PC as it was made for DirectX, and because of that, anti-aliasing looks much more attractive. Heck, I'd even venture to say that the PC version uses up less CPU power and less RAM to run. It uses up about 18-20MB of RAM, and even with my 8800GTX that's on it's way out, I can play the game at 1280x1024 (more on that in a sec) resolution with 4x4 Supersampling AA, 16x AF, gamma correction, supersampling transparency, V-sync, and forced trilinear mip-maps without ANY problems. It's worth it, believe me, it's worth it. Even with fraps running and recording, the framerate doesn't suffer AT ALL, which is why I say it's easier on the resources.
Anyways here's how to do it without having to burn the ISO to disc, or re-install the game:
You will need an image-mounting software like Daemon Tools.
The game looks for the disc on the drive that you installed the game from. However, it doesn't detect the disc like the more recent games do. Which is why even if you install the game from the Installation Disc's ISO (say from virtual drive H: ), it will not detect the ISO of the game disc when you try to play it (from virtual drive H: ). It looks for the NAME of the disc. The names of the discs are as follows (confirm by opening My Computer with the disc in the disc drive):
Disc 1 = FF8_DISC1
Disc 2 = FF8_DISC2
Disc 3 = FF8_DISC3
Disc 4 = FF8_DISC4
In order to 'fool' the game, you need go to the base-path of the drive that the ISO is on ('C:\' in my case), and create a folder with the name of the disc you're going to be playing. If you're just starting the game, the name of the folder will be 'FF8_DISC1'. Put the ISO in that folder. Do the same for each subsequent disc, as you need them.
Next you need to modify your registry. I will tell you the exact value to change, do not change anything else for the sake of your own sanity incase you change/delete something important.
Open the Start Menu, click 'Run...', type in regedit and click 'OK'.
Once the 1.00 'folder' is open, you should see the key called 'DataDrive' (it's the 3rd one from the top for me). Right-click 'DataDrive' and then 'Modify' (NOT 'Modify Binary Data'). Change the Value Data to the drive letter that Daemon Tools generates when it's emulating a drive (F: in my case).
My Computer > HKEY_LOCAL_MACHINE > SOFTWARE > Square Soft, Inc > FINAL FANTASY VIII > 1.00
Click OK and close the Registry Editor.
Now, run Daemon Tools and have it emulate a drive. Go into My Computer if you want to make sure you set DataDrive to the correct drive letter. Mount the ISO image that you put into the FF8_DISC1 folder, and play the game!
Now to go back to what I said about the doubled resolution of the game (playing it at 1280x1024). In my search to try and remember how to play the game from ISO, I stumbled upon a new FF8 Launcher program that was made to make FF8's graphics compatible with the newer generations of video cards (Nvidia namely). It is NOT the old Nvidia patch that is nearly 10 years old. It's a new one developed by a 3rd-party. Anyways, this Launcher completely removes (as far as I've played) the 'black boxes' and texture tile issues that crop up with nVidia cards (not sure how it plays on ATI though). You can get the Launcher here:
FF8 Launcher - Custom resolutions and 8-bit paletted textures fix (patch)
If it gives an error when you try to run it, you probably need to download and install the Microsoft Visual C++ 2008 Redistributable package that he has linked.
None of these images have been modified in any way. I used Print Screen, pasted them to a BMP, and converted them at 100% JPEG quality in Adobe Photoshop CS 8.0. The difference in size between the PSX FMV shot and the PC FMV shot is NOT because I saved either of them any differently than the other.
FF8 Launcher (Before & After)
PC FMV Vs. PSX FMV
YouTube - FF8 [Fire Cavern][PC Version][nVidia Fixed]