Videos run fine from the CD drive. Everything else seems to work just fine except the program itself... I even copied the contents of the first CD to a folder, and changed all directories in the registry referring to my CD drive to this folder I made (only for FF7, mind you), and I still get the same message.

As for virtual drive software, everywhere I've looked I've had to buy it, and I can buy the Playstation game itself for about as much as most of this software is. This PC version came from a friend, and he never actually used it because his brother ended up buying the Playstation version, like, the next day... soo, he never really had problems with it (whether or not you can have problems with something that you never used is a different discussion).

Interesting story: The first video that played (out random order of all the videos on the first CD) was the scene with Aeris praying in the church, and Sephiroth killing her... I thought that was odd for some reason.