Please clear this up for me. (SPOILERS)

[Mr. Graves]

I was recently replaying FF7 and there one thing that always stumps me. Now, I do understand the whole Jenove/Sephiroth/Cloud/Zack thing, so it's not directly relating to that. (SPOILER)In the flashback scene where Cloud thinks he's Zack, Sephiroth snapps and burns down Nibelhelm. Yet, when Cloud and Co. come back to Nibelhelm in Disc 1, the townspeople deny the town ever being set ablaze. So, my question is, since what happened with Sephiroth coming to Jenova in that mako reactor at Mt. Nibel actually did happen, why wasn't Nibelhelm affected at all in reality. I mean, Sephiroth (according to Cloud's inaccurate flashback) was going to his "mother" in the reactor right after burning down that village. Yet, later in Disc 1, the town is untouched. The townspeople should remember something.

Why is that?? I'm really curious here.

EDIT: Horrible typos. *fixes*

[TheAbominatrix]

Well if you read the letter in Tifa's room when you come to Nibelhiem, you'll find the answer.

In short, the town did burn down. Whoever survived probably just moved away, because they arent there anymore. So Shin Ra rebuilt the town specifically for the Reunion, and hired actors to take the places of the townspeople, should anyone come around.

[Mr. Graves]

I so completly didn't do that. Thank you. And, my save file is right outside the town on Disc 1. Awesome.

[TheAbominatrix]

Anytime. A lot of people seem to miss this letter, I think I only found it cause I'm an insane button masher.

[Big D]

Whoever survived probably just moved away, because they arent there anymore.

Oh, they're still there. All the waddling, black-robed Sephiroth clones... they're the survivors of the massacre. Hojo had them rounded up to use for his experiements. Killing two birds with one stone - the truth is covered up because the survivors are in custody, and Hojo gets plenty of guinea-pigs for his experiments. Sick stuff.
The letter from Zangan, in Tifa's piano, explains this. Zangan and Tifa were apparently the only ones who escaped. Everyone else was already dead, or captured by Shinra.

[TheAbominatrix]

Oh really? That one I didnt know. Thanks, Heavy D.

[Big D]

To find that letter, you just have to play the game's main theme on Tifa's piano, without the 'help' screen showing all the notes. You'll also get the item for her strongest Limit Break.

[Breine]

If Tifa survived the fire, then why dosn't she remember?

[eternalshiva]

She remembers I think cause Cloud and Tifa are like WTF the entire time... plus at that point she has a sneaking GIANT HINT that Cloud (SPOILER) isn't really a soldier If I remember correctly.

[TheAbominatrix]

Yes, she does remember, but there's not really much she can do about it. If I remember right, she and Cloud were interrogating these people, asking them what the duece was going on, but of course the actors played like nothing was wrong.

[Big D]

Tifa knew that Cloud's memories were messed up; however, she played along with his stories becasue she was afraid of what would happen if she revealed her version of the truth. Thought it might destroy his mind or something. She humoured him in the hope of learning the real story. A brave and caring girl, that Tifa...

[Xider]

Yeah, Big D is right. Tifa was afraid that if she revealed Cloud's true identity or whatever, that he would loose his mind. Which ironically enough is what he did until she helped him find the real him in the lifestream!

[Raistlin]

Originally posted by Big D Cup
Oh, they're still there. All the waddling, black-robed Sephiroth clones... they're the survivors of the massacre. Hojo had them rounded up to use for his experiements. Killing two birds with one stone - the truth is covered up because the survivors are in custody, and Hojo gets plenty of guinea-pigs for his experiments. Sick stuff.
The letter from Zangan, in Tifa's piano, explains this. Zangan and Tifa were apparently the only ones who escaped. Everyone else was already dead, or captured by Shinra.

I may not be remembering completely accurately, but I believe the note on Tifa's desk states that everyone was killed, and that Hojo ordered the Shinra clones to parade as Nibelheim citizens.